Instem PLC

Instem PLC (LSE: INS) is an FTSE AIM All-Share index-listed leading provider of IT solutions & services to the life sciences market delivering compelling solutions for Study Management and Data Collection. This Report covers the Investment Highlights, Conclusion, and Recommendation on the stock.

Investment Rationale – Sell at GBX 823.25

• Resistance near Current levels: INS’s stock price crossed reached the Resistance (R2) stated in the previous report on 20 July 2023, and might witness some sell-off from the current levels. Considering the market conditions and the price action, it is prudent to exit the stock, as the prices might pull back from these levels.

• Sluggish Profitability Margins: For FY22, the EBITDA margin of the group was 18.4% against the industry median of 25.9% and the operating margin of INS slipped to 9.5% in the same period (FY22) against the industry median of 13.1%. Also, the company reported a lower Net margin of 8.0% in FY22 as compared to the industry median of 14.0%.

• Declining liquidity ratios: The group’s quick ratio for FY22 was reported at 0.93x, which is lower than the industry median of 1.30x. Further, INS’s current ratio declined to 0.93x during Q3FY22, against the industry median of 1.30x.

Share Price Chart  

Conclusion

Based on the notional gains, macroeconomic challenges, and price action stance, a "SELL" recommendation on Instem PLC (LSE: INS) has been given at the current market price of GBX 823.25 (as of 30 August 2023, 10:50 AM, GMT+1).

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is 30 August 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and/or technical analysis taking into consideration both short-term and long-term scenario.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.

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