On Jan 18, we issued an updated research report on Neogen Corporation NEOG. The company’s animal genomic business has developed rapidly with worldwide growth of 8% in the fiscal second quarter. However, the company operates in a highly competitive landscape. The stock currently carries a Zacks Rank #3 (Hold).
Shares of Neogen have underperformed its industry over the past six months. The stock has declined 26.6% in comparison with the industry’s 5% fall.
Neogen’s animal genomic business has been seeing strong growth. Also, the company’s beef genomics business performed well in the last reported quarter, including both the beef breed associations and for commercial producers.
The business, which originated in Lincoln Nebraska, has so far expanded well over the last few years, as the company continued to add laboratory capabilities in Scotland to serve the growing European market, purchased Deoxi lab, a genomic laboratory in Brazil, and moved into Australia, acquiring the genomics business from Queensland University in September 2017. This apart, the company has established a laboratory in Shanghai, China.
We are also upbeat about Neogen’s solid global business where revenues increased 10% from a year ago in the fiscal second quarter. This segment accounted for 39% of total revenues in the last reported quarter. According to Neogen, in recent times, international business is growing at a faster pace than the overall business.
The company is also bullish about the growth prospects in China and India. Neogen expects an increase in both the country’s middle-class points to lead to a rise in demand for higher-quality foods, including animal protein and dairy products.
Meanwhile, Neogen faces intense competition from small businesses to divisions of large multinational companies. Some of these organizations have substantially greater financial resources than the company. Historically, Neogen has faced intense competition from the development of new technologies by its competitor. Going forward this can affect the marketability and profitability of Neogen’s products.
Some better-ranked stocks in the broader medical space include Veeva Systems VEEV, Omnicell, Inc. OMCL and Illumina, Inc. ILMN.
Veeva Systems’ long-term earnings growth rate is estimated at 19.5%. The stock flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Omnicell’s long-term earnings growth rate is projected at 11.8%. The stock carries a Zacks Rank #2 (Buy).
Illumina’s long-term earnings growth rate is expected at 23.4%. The stock carries a Zacks Rank of 2.
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