Results: Neogen Corporation Delivered A Surprise Loss And Now Analysts Have New Forecasts
Shareholders might have noticed that Neogen Corporation (NASDAQ:NEOG) filed its quarterly result this time last week. The early response was not positive, with shares down 7.1% to US$18.16 in the past week. Revenues came in at US$230m, in line with estimates, while Neogen reported a statutory loss of US$0.02 per share, well short of prior analyst forecasts for a profit. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Neogen after the latest results.
View our latest analysis for Neogen
Taking into account the latest results, the current consensus from Neogen's dual analysts is for revenues of US$938.5m in 2024. This would reflect an okay 2.2% increase on its revenue over the past 12 months. Per-share earnings are expected to swell 10% to US$0.06. In the lead-up to this report, the analysts had been modelling revenues of US$960.6m and earnings per share (EPS) of US$0.11 in 2024. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a pretty serious reduction to earnings per share numbers.
The consensus price target fell 33% to US$17.50, with the weaker earnings outlook clearly leading valuation estimates.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Neogen's revenue growth is expected to slow, with the forecast 4.4% annualised growth rate until the end of 2024 being well below the historical 17% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 7.8% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Neogen.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Neogen. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Neogen's future valuation.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At least one analyst has provided forecasts out to 2026, which can be seen for free on our platform here.
And what about risks? Every company has them, and we've spotted 1 warning sign for Neogen you should know about.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
