Should you sell this Information Technology Stock – Integrated Research Ltd?

Integrated Research Limited

IRI Details

Decent Performance in 1HFY18: Integrated Research Limited (ASX: IRI) is a leading global provider of user experience and performance management solutions for unified communication, payments and IT infrastructure. The company posted revenue of $45.70 Mn in 1HFY18 which is up by 5% as against 1HFY17 on a year on year (yoy) basis. The overall revenue surged due to strong US license sale offset by cyclical Infrastructure downturn during the same period. Revenue from Unified communications increased by 18% to $27.8 Mn over the prior corresponding period with strong license sales growth from Microsoft and Cisco platform. Profit after tax (PAT) came at $9.26 Mn in 1HFY18 as compared to $7.73 Mn in 1HFY17, up by 20% YoY. Over 95% of the Company’s revenue was derived from about 75 countries outside of Australia. The company has also entered into an agreement with Cisco to join its Solutions Plus Program. From 2018, IRI is one of a select group of companies with Cisco-certified products that are available for purchase through the Cisco Global Price List. The Company continued to invest in its future with gross spending on research and development activities, representing 18% of the revenue. Group’s operating margin for the current half was 20% as compared to 18% for the previous corresponding period.
 

Revenue Trend (Source: Company Reports)
 
Recently, the director of the company (Mr. Stephen John Killelea) has sold respective 15 Mn shares in the company via on-market transaction and intends to partially use the funds in philanthropic activities going forward. Meanwhile, IRI stock price has risen by 22.05% in the past six months and is trading at slightly higher levels in terms of price to earnings ratio as compared to its peer companies. The stock has been added to S&P/ASX 300 index effective March 19, 2018. We believe that investors can take profits from the stock given the 46.6% returns delivered in last one year while the stock is exposed to cyclical downturn. We give a “Sell” recommendation at the current price of $3.98
 

IRI Daily Chart (Source: Thomson Reuters)

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