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Down 47% in five months: Are Integrated Research (ASX:IRI) shares a buy?

The Integrated Research Limited (ASX: IRI) share price has fallen 47% in five months, could it be worth a buy?

Integrated Research is an global IT business that provides user experience and performance management solutions for payment transactions and collaborative systems. It helps optimise mission-critical systems with insights that aim to be intelligent and actionable.

Integrated Research update

The company decided to give the market an update so that investors can stay fully informed about its upcoming result.

A couple of weeks ago the company gave a revenue and profit estimate update for the half year ending 31 December 2020.

In that update it said that revenue was estimated to be in the range of $34 million to $37 million, down from the prior corresponding period’s revenue of $53.2 million. Profit after tax was expected to be in the range of breakeven to $2 million, down from the prior corresponding period’s profit of $11.8 million.

The ASX share said that it’s in the early stages of preparing its half-year result for the six months ending 31 December 2020. Based on internal management accounts, Integrated Research thinks that both revenue and profit after tax will be at the lower end of the guidance. It pointed out that the Australian dollar strengthened, or the US dollar weakened, by another cent on the last day of the year, resulting in further unrealised exchange losses.

Integrated Research’s net cash balance was $1.7 million at 31 December 2020, down from $4.7 million at 30 June 2020. The company said that despite the shortfall in revenue, cash receipts from customers for the period was more than $40 million again. Integrated Research said that there were no material doubt debt exposures arising during the period.

Other developments

During the period, the company released new cloud solutions for Microsoft Teams and Zoom, an expansion of the Collaborate product line.

The company also said that, as part of its new cloud portfolio, a US$1.4 million contract was signed late in December for Payment Analytics which is part of the Transact product line. Revenue from this contract will be recognised on a subscription basis in future periods.

Summary thoughts

Being at the low end of the guidance is another disappointment. But, some analysts think that the profit will rebound in FY22 onwards. If earnings do recover quickly then this could be a short term opportunity to buy shares at a depressed price. According to projections on CommSec, Integrated Research is valued at 22 times the estimated earnings for the 2020 financial year.

Integrated Research isn’t a business that’s on my own watchlist, but it was somewhat of a market darling just six months ago.

Other ASX growth shares that service a wide range of other businesses are suffering a bit at the moment, such as Altium Limited (ASX: ALU). However, I believe that FY22 could be a much better year for plenty of them.

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Rask's analyst has just finished a 7,500-word report, The Ultimate BNPL Sector Report, taking a deep dive into this booming ASX sector. It shines a spotlight on each of the major players. You can get the full analyst report for FREE by CLICKING HERE NOW.

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At the time of publishing, Jaz owns shares of Altium.

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