SONO - iRobot read-throughs: Amazon is expected to see synergies with acquisition warning for Sonos

Amazon's ( NASDAQ: AMZN ) $1.7B acquisition for iRobot ( IRBT ) is still creating buzz this week.

Bank of America thinks iRobot ( IRBT ) will bring to Amazon ( AMZN ) its knowledge and expertise in building consumer-facing robots and thinks there is some synergy in how the two companies envision the role that products and services can play in the smart home.

The firm said it was unusual that IRBT did not provide a sense for timing on when the deal might be completed which, but thinks a 6-month timetable is reasonable. Based on where IRBT competes, the deal is expected to be reviewed by regulators in the U.S., UK, European Union and Japan.

"We’d expect regulators to closely scrutinize the deal given the risk AMZN could prioritize IRBT’s products over competitors on its Amazon.com platform and concerns on how it uses data gathered by the robot vacuums and robot mops, among other areas. On this point, recall that IRBT’s products use cameras to navigate, create a map of users’ homes and gather other data."

Looking at potential implications for other companies, analyst John Babcock and team said IRBT's earnings report suggests headwinds for Sonos Inc. ( SONO ). While the companies operate in different markets and SONO has more consistently achieved guidance, IRBT is noted by the BofA analysts to target customers in a similar income bracket and its results as well as those by Logitech and several large retailers indicate that there has been a notable slowing in demand for consumer discretionary goods. The firm kept a Buy rating on SONO due to its attractive valuation at a 9.2X EV/EBITDA trading multiple, but thinks a swing lower on earnings day is possible after shares got a nice M&A bump when IRBT was bought out.

Shares of IRBT fell 0.37% in Monday to $59.32 vs. the $61.00 deal price.

Read more about the AMZN-IRBT deal.

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