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Neogen Up on Cargill Partnership

Zacks Equity Research

Neogen Corp (NASD:NEOG) recently announced that it has licensed patents owned by Cargill, Inc. and Branhaven LLC that are significant for genomic evaluation in beef and dairy cattle. Terms of the deal were undisclosed.

The technology, known as BeefGen, helps to identify important genomic tools necessary to improve both meat and milk production. Neogen’s shares inched up 0.9% in the trading session following the announcement of the partnership.

Access to the highly developed technology of Cargill is expected to be beneficial to GeneSeek, a subsidiary of Neogen. GeneSeek will use the licensed technology and continue to support cattle seed stock breeders, cow/calf operators, feedlot operators and dairy producers.

The new technology will facilitate dairy cattle producers to identify animals that can produce milk of superior quality. Consequently, the dairy industry will gain from improved overall milk production efficiency. The industry is poised for robust growth in the coming years with the introduction of more functional dairy products and a mass shift in preference toward vegetarian diets supplemented by dairy products.

Additionally, BeefGen should assist beef producers identify animals that best optimize weight gain, tenderness, carcass quality, and meat yields – factors that validate value of each animal harvested. Moreover, the technology will help categorize genetically superior animals for breeding purposes that can produce high-quality offspring.

Cargill views the licensing agreement with Neogen in a positive light. It foresees greater scope of genetic testing and bioinformatic application from the partnership, which in turn, will allow it to reach out to dairy and beef producers on a larger scale.

Partnerships such as these demonstrate the growing importance of genomic analytic and bioinformatic study in the field of agriculture and cattle rearing. Useful and innovative genomic tools and solutions are being welcomed today to cater to the ever-increasing needs of the global food market.

Currently, Neogen carries a Zacks Rank #5 (Strong Sell).

 Investors interested in the medical products industry can look at better-ranked stocks like Cardiovascular Systems Inc. (NASD:CSII), Mead Johnson Nutrition Co. (NYSE:MJN) and NuVasive, Inc. (NASD:NUVA). All these stocks carry a Zacks Rank #1 (Strong Buy).

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