Immunodiagnostic Systems Holdings (LON:IDH) has been on my watch list for about 12 months, as this medical diagnostics equipment maker has performed very well historically. However, its trading performance went wrong in late 2011, and the shares crashed from over 1000p to a low of around 250p. They're not a great deal higher at 281p now, having slipped back down after a rally late last year.

Here is a 2 year chart (Stockopedia puts in a 200-day moving average (the red line) by default, which I find quite useful to show the trend, so have left it in). Also please note it has a logarithmic Y-axis scale.

IDH has net cash, and is on a forward PER of 9, so looks interesting. The big problem is that new entrants to their markets have eroded what was a profitable niche, so it's difficult to determine whether IDH is a company in decline, or whether they can once again resume growth. So because of that, I found it impossible to value - because understanding the most likely future trend in sales & profits is absolutely crucial to valuing any company, but is unknown here.

It is also complicated by some of IDH's prouduct lines (manual testing kits) being replaced by automatic ones, which further muddies the water.

IDH have issued a statement this morning concerning a collaboration agreement with a French peer called Diagnostica Stago.

Stago are to pay IDH E3.5m in milestone payments, and will also "contribute" (implying that this is only part of the cost) E1m to the development of a new product over the next 2-3 years.

Unusually, a Director of IDH is personally entitled to 30% of the milestone payments, due to a 2005 agreement at a subsidiary acquired by IDH in 2007.

It all sounds nice (apart from that last bit about the Director), but as is often the case with this type of announcement, I'm left none the wiser about how this should affect the valuation of IDH. There is no mention of how this agreement will affect profits (since we don't know what costs are associated with this deal) or what growth it may or may not trigger.

However, we are in a bull market, so the purpose of this RNS…

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