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Integrated Research Limited shares surge 19% in 3 weeks, what happened?

Technology

The shares of performance management software specialists Integrated Research Limited (ASX: IRI) have had a huge start to July, surging on Friday to a new all-time high of $3.40, some 380% higher than 5 years ago!

What’s happening at Integrated Research Limited?

The main catalyst for this month’s surge may well be a move downward in the Australian dollar, which helps to increase the company’s earnings in Australian dollars and make the company more profitable in Australia.

The other major catalyst may be changes being made by the appointment of a new CEO on June 12, however it’s unlikely that we’ll see these changes flow through for at least 6 months.

Time to buy?

Integrated Research is a complex company and a strange business to be a shareholder of. The share price regularly treads water for periods of 3-6 months but a look at the long-term graph shows that management have generated excellent returns for long-term shareholders.

Also notable is the lack of sharp falls. Analysts and commentators have been critical of management that are unable to meet forecasts (ie. QBE Insurance Group Ltd (ASX: QBE)), so Integrated Research’s track record makes it a promising target.

The downside though, is that the company is looking expensive, at a price-to-earnings ratio of around 30 times, a low dividend yield, and with a new CEO in charge there is the potential for the company’s performance to move significantly in the short to medium term. There must be better options!

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Returns As of 6th October 2020

Motley Fool contributor Andrew Mudie owns shares of Integrated Research Limited and QBE Insurance Group Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not 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. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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