Is Integrated Research Limited (ASX:IRI) Potentially Undervalued?

Integrated Research Limited (ASX:IRI), is not the largest company out there, but it led the ASX gainers with a relatively large price hike in the past couple of weeks. Less-covered, small caps tend to present more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Today I will analyse the most recent data on Integrated Research’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Integrated Research

Is Integrated Research still cheap?

Great news for investors – Integrated Research is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is A$0.67, but it is currently trading at AU$0.49 on the share market, meaning that there is still an opportunity to buy now. Integrated Research’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

Can we expect growth from Integrated Research?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with an expected decline of -3.5% in revenues over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Integrated Research. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? Although IRI is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to IRI, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping an eye on IRI for a while, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

If you want to dive deeper into Integrated Research, you'd also look into what risks it is currently facing. Case in point: We've spotted 3 warning signs for Integrated Research you should be mindful of and 1 of these doesn't sit too well with us.

If you are no longer interested in Integrated Research, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.