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NEOGEN (NEOG) Fortifies Global Position via Megazyme Buyout

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NEOGEN Corporation NEOG recently announced the completion of its acquisition of Ireland-based Megazyme, Ltd., a renowned supplier of analytical solutions to quality control laboratories in the global food and beverage industry. Following the buyout, Megazyme will continue to operate as a standalone business but will be managed through NEOGEN’s European operations in Scotland.

However, the terms of the agreement have not been disclosed.

With the latest buyout, NEOGEN aims to strengthen its Food Safety business on a global scale.

Rationale Behind the Buyout

Per NEOGEN’s management, the addition of Megazyme’s product line to NEOGEN’s food safety products will allow it to expand its commercial relationships across food companies. This will aid the company to ensure food safety along with improved quality and nutritional content. The buyout is expected to strengthen NEOGEN’s relationships with the largest food producers and those companies that are working toward ensuring food security and quality.

Industry Prospects

Per a report by Grand View Research, the global food safety testing market was estimated to be $18 billion in 2018, growing at a CAGR of 7.7% between 2019 and 2025. Factors like increasing demand for packaged and processed food, rising incidents of chemical contamination in food processing industries and growing consumer awareness about food safety are expected to drive the market.

Given the market potential, the recent acquisition is expected to significantly boost NEOGEN’s business worldwide.

Recent Developments in Food Safety

Of late, NEOGEN has been witnessing a few developments in this business arm.

The company, during its fiscal 2021 second-quarter earnings call in December 2020, witnessed a robust performance by the food safety segment. The uptick in segmental revenues primarily resulted from strength in its sales of Soleris microbial testing system, Soleris Next Generation, and Listeria Right Now test system.

The same month, NEOGEN developed the new Reveal tests for horse, beef, sheep and poultry to determine meat speciation in raw meat and environmental samples in just a few minutes.

In October, NEOGEN launched a new food extraction method, Reveal 3-D Food Buffer, that expands the capabilities of select Reveal 3-D food allergen tests to include the direct testing of food products. Additionally, NEOGEN launched Reveal 3-D for Gluten, which offers the capability of extracting and testing food products and ingredient samples as well as environmental samples and clean-in-place rinses.

Price Performance

Shares of the company have gained 24.5% in the past year compared with the industry and S&P 500’s 5.2% and 17.1% growth, respectively.

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks from the broader medical space are Hologic, Inc. HOLX, IDEXX Laboratories, Inc. IDXX and Integra LifeSciences Holdings Corporation IART.

Hologic’s long-term earnings growth rate is estimated at 17.4%. The company presently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

IDEXX’s long-term earnings growth rate is estimated at 15.8%. It currently carries a Zacks Rank #2 (Buy).

Integra’s long-term earnings growth rate is estimated at 9%. The company presently carries a Zacks Rank #2.

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