Why iRobot's Shares Roared Today


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of iRobot were up by nearly 10% today, after reports emerged that the FDA had cleared the company's robotic telepresence 'bot for hospital use.

So what: iRobot and partner InTouch Health have been developing the RP-VITA remote presence robot, which looks very much like an iPad on a postmodern pedestal, for some time. This partnership was unveiled about six months ago, so this is a relatively quick approval by FDA standards. Of course, since the robot isn't going to be slicing up spleens or dispensing medication, there's very little risk of patient harm. RP-VITA will be able to navigate hospitals independently using advanced mapping and sensing technology, and InTouch will sell it as its new flagship telemedicine 'bot.

Now what: InTouch already has its existing telemedicine 'bots in more than 600 hospitals around the world, so iRobot has itself a worthwhile partner. It's not known what the revenue split will be on this project between InTouch and iRobot, but if we assume a roughly equal split, and use the available numbers reported in Slashgear -- between $4,000 and $6,000 per month to operate -- then iRobot has a potential upside right now of about $18 million in annual revenue. That's about 4% of iRobot's trailing 12-month revenue. It's not much, but it's a good start. Today's jump simply represents the heightened expectations now placed on iRobot as it transitions into new and potentially lucrative environments.

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The article Why iRobot's Shares Roared Today originally appeared on Fool.com.

Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter, @TMFBiggles, for more news and insights.The Motley Fool recommends iRobot. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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