Diagnostic testing kit specialist Immunodiagnostic Systems (IDS) has, once again, driven strong growth in key geographic areas to exceed City profits forecasts.

Results for the year to March saw pre-tax profit before amortisation of goodwill more than treble to £1.32m (£410,000) on turnover up 49.7% to £8.13m. Earnings rose ahead of expectations from 2.66p to 7.93p a share, before amortisation and, with £885,000 cash, the company plans a maiden dividend of 1p a share.

In the UK, IDS’ most mature market where it manufacturers and distributes its own immunoassay tests, sales grew a 46%. A key driver has been the company’s approach to automation for ‘high throughput laboratories’.

The integration of products into automated systems was previously a hurdle for IDS, whose main competitors were well established in this market where it was not. The company is now in discussion or has agreed licensing terms with ‘a number of the ‘top ten’ global IDV [In Vitro Diagnostics] companies’ – four or five according to managing director Roger Duggan – to appear on the fully-automated instruments of such companies, ‘with a concomitant royalty stream receivable’.

Duggan says ‘the introduction of such automation was ‘critical in gaining market share, coinciding with the withdrawal of Nicols Institute Diagnostics from the global market’. This should push growth in key territories at IDS where distribution streams are now well established – namely the UK, the US, Germany and France – and with a planned move into the Japanese market through a marketing and sales agreement worth £200,000 with apparently well-established Medical and Biological Laboratories in Nagoya, the company look set to continue the trend.

We recommended IDS at 100p and like Duggan, reckon the company is now ‘going gang-busters!’. The shares reached a high of 170p after the results and then corrected to the current 154.5p, putting them on a p/e of 22.5. Analysts at Teather and Greenwood think they could be worth 230p with IDS ‘delivering on all fronts’. They see a significant upside to the current price and so do we. Hold on.

Immunodiagnostic Systems	AIM	£48.64m	202.50p	0.00p
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