MEDICAL testing kit maker Immunodiagnostic Systems (IDS) has cut its revenues forecast for the year after finding that sales of its new automated models are not rising quick enough to make up for a fall in its manual tests.
The Boldon-based company, which has seen a 70% slide in value over the year, fell by another 10% yesterday to around 250p.
An expected fall in revenues of 7-10% is the first decline reported by the company since it joined the Alternative Investment Market in 2004.
IDS said in June that sales had risen by £3.5m to £53.5m for the year to the end of March and that it had forecast revenues to grow at the same pace as last year.
But yesterday it said: “The planned increase in IDS-iSYS derived revenues from new placements and an increasing number of automated assays, whilst encouraging, is however not materialising at a rate that will fully offset the ongoing manual revenue decline in the current financial year. “
Chief executive Patrik Dahlen said: “The decline in manual is more or less in line with what we had anticipated.
“Where we are coming in a little bit short is in the pick up of the automated revenue. Whilst we see some early success, it has been a little slower than we had anticipated.”
Clinics and laboratories are increasingly turning away from using manual testing kits, which make up around two-thirds of IDS sales, and buying the automated variety.
The growing market for the automated kits means there is growing competition among manufacturers which is putting pressure on pricing.
IDS said it expects to see sales worth £48-50m of the kits, which are used to analyse blood, serum and plasma for signs of disease and measure the levels of vitamin D.
It added that revenues from the manual tests business had fallen by 19% in the five months to the end of August. Total revenues for the period fell to £19.9m from £22m a year earlier.
Analysts were expecting higher sales of the automated tests than the 15% growth reported by the company and some have changed their view of IDS’s performance. Brokerage N+1 Brewin downgraded its rating on the stock to “reduce” from “add.” Peel Hunt and Panmure Gordon cut price targets.
IDS also said operating costs were being “carefully managed” and intends to save £2m this year. It added that the firm had been strongly cash generative with net cash up by £4.2m since the end of March.
IDS had also said that operating costs were being “carefully managed” and intends to save £2m this year