Here's Why You Should Invest in Neogen (NEOG) Stock Now
Neogen Corporation NEOG is gaining from core growth in both segments despite the challenges of lower volumes and inventory levels in end markets. Further, recent product launches drive Neogen’s growth. Meanwhile, escalated operating costs are concerning.
In the past year, the Zacks Rank #2 (Buy) stock has gained 21.3% compared with a 0.1% fall in the industry and an 13.4% increase of the S&P 500.
The renowned food and animal safety products provider has a market capitalization of $4.99 billion. The company’s fiscal third-quarter earnings surpassed the Zacks Consensus Estimate by a remarkable 200%.
Let’s delve deeper.
Factors At Play
Product Launches: Neogen, of late, has been focused on product launches to strengthen its business on a global scale.
In August 2023, Neogen launched Igenity Enhanced Dairy, a new and progressive genomic data management tool. The same month, Neogen launched an extensive selection of new genetic tests through Paw Print Genetics and Canine HealthCheck solutions. These new tests can identify genetic sequences associated with potential diseases and other traits and provide invaluable insights into a canine’s genetic composition.
In June 2023, Neogen launched My CatScan 2.0, a significantly upgraded and improved version of the test from a leader in cat genetic screening.
Food Safety Sales Growth Continues: NEOG Food Safety segment is primarily engaged in the development, production and marketing of diagnostic test kits, culture media and related products used by food producers and processors to detect harmful natural toxins, foodborne bacteria, allergens and levels of general sanitation.
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Regarding the latest development, revenues in the Food Safety segment were $169 million in the fiscal fourth quarter, an increase of 151% compared to the prior year, including core growth of 3.9%. Sales in the Culture Media & Other category grew high single digits on a core basis with strong growth in food quality and nutritional analysis products in its Megazyme business.
Animal Safety Business Grows Well: Neogen’s Animal Safety segment continues to grow, led by sales of vet instruments and disposables and a new line of business at a large retail customer. Neogen grows solidly in cleaners, disinfectants and rodenticides within the biosecurity portfolio.
In terms of the latest development, during the fiscal fourth quarter, worldwide genomics revenue was up mid-single digits on a core basis, led by solid growth in international beef markets and companion animal testing.
Downsides
Mounting Operating Expenses: In the fiscal fourth quarter, sales and marketing expenses rose 100.6% to, whereas administrative expenses rose 129%. R&D expenses were $7.1 million, up 84.1% year over year. Operating costs were up 112.4% from last year’s quarter.
Weak Solvency: Neogen exited fiscal 2023 with cash and investments of $245.6 million, down from $381.1 million at the end of the fiscal fourth quarter of 2022. At the fiscal fourth quarter’s end, the company’s non-current liabilities included outstanding debt of $900 million, unchanged from the fiscal third-quarter level.
Estimate Trend
In the past 90 days, the Zacks Consensus Estimate for Neogen’s earnings for 2023 has moved 140% north to 60 cents.
The Zacks Consensus Estimate for 2023 revenues is pegged at $965.7 million, suggesting a 17.4% rise from the 2022 reported number.
Other Key Picks
Some other top-ranked stocks in the broader medical space are Haemonetics HAE, Quanterix QTRX and SiBone SIBN. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Haemonetics’ stock has risen 19.9% in the past year. Earnings estimates for Haemonetics have increased from $3.56 to $3.74 in 2023 and $3.96 to $4.07 in 2024 in the past 30 days. It currently sports a Zacks Rank #1.
HAE’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 19.39%. In the last reported quarter, it posted an earnings surprise of 38.16%.
Estimates for Quanterix’s 2023 loss per share have narrowed from $1.19 to 97 cents in the past 30 days. Shares of the company have increased 167.5% in the past year against the industry’s decline of 1.7%. It currently carries Zacks Rank #2.
QTRX’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 30.39%. In the last reported quarter, it posted an earnings surprise of 55.56%.
Estimates for SiBone’s2023 loss have narrowed from $1.42 to $1.27 per share in the past 30 days. Shares of the company have increased 31% in the past year compared with the industry’s rise of 1.9%. It currently carries Zacks Rank #2.
SIBN’s earnings beat estimates in all the trailing four quarters, the average surprise being 20.37%. In the last reported quarter, SiBone delivered an earnings surprise of 26.83%.
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Haemonetics Corporation (HAE) : Free Stock Analysis Report
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