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Here's Why You Should Add Neogen (NEOG) to Your Portfolio Now
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Neogen Corporation (NEOG - Free Report) has been gaining from strength in the company’s Food Safety and Animal Safety business segments. The company’s better-than-expected results in the first quarter of fiscal 2022 buoy optimism. However, downsides may result from a stiff competitive landscape and foreign exchange fluctuations.
Over the past year, shares of this Zacks Rank #2 (Buy) company have outperformed the industry. The company has gained 24.6% compared with 5.7% growth of the industry.
The developer and marketer of food and animal safety products has a market capitalization of $4.66 billion. Its first-quarter fiscal 2022 earnings surpassed the Zacks Consensus Estimate by 6.7%.
Over the past five years, the company registered earnings growth of 8.6%, ahead of the industry’s 6.2% rise. The company projects 17.54% growth for the current year compared with the industry’s growth projection of 17.50%.
Let’s delve deeper.
Q1 Upsides: Neogen exited the first quarter of fiscal 2022 on a bullish note with better-than-expected revenues and earnings. The newly launched AccuPoint Advanced NG contributed to growth in environmental sanitation. The ThyroKare supplement drove revenues in the animal care products. The StandGuard product line also contributed to growth. Integration of the Megazyme product offerings into the company’s product portfolio looks encouraging as well. Neogen’s solid domestic and international performance across all businesses buoys optimism. Expansion of gross margin is an added advantage.
Product Launches: Neogen, of late, has been focusing on product launches to strengthen its business on a global scale.
In July 2021, Neogen released a new test capable of detecting the delta-9-tetrahydrocannabinol (Δ9-THC) cannabinoid levels in hemp plants. The new Reveal Q+ for Δ9-THC can accurately identify and report THC levels, ranging from 0.1% to 1.6%, allowing fast, reliable, and on-demand crop monitoring. In May 2021, Neogen launched the AccuPoint NG ATP Sanitation Monitoring System. The new sanitation monitoring system has been redesigned to be more user-friendly or offer rapid, accurate and easy to monitor test of data.
Image Source: Zacks Investment Research
Strategic Partnership Deals: Of late, Neogen has inked a series of partnership deals, which are expected to aid in the company’s segmental growth and international expansion.
In June 2021, Neogen extended its strategic partnership with Gencove, Inc. The extended collaboration aims to continue the development of robust and innovative animal genomic testing. The company collaborated with Center for Aquaculture Technologies (CAT) to provide high-quality genotyping services to aquaculture producers in the same month. This partnership will bring together Neogen and CAT’s expertise to apply modern sequencing and genotyping technologies to aquaculture species.
Downsides
Currency Headwinds: In the first quarter of fiscal 2021, unfavorable currency movements significantly impacted Neogen’s international business. When the magnitude of the pandemic became evident and started spreading across the world, there was a move toward the safety of the U.S. dollar, negatively impacting local currencies in the company’s international locations, particularly those where the outbreaks were less controlled.
Competitive Landscape: Neogen faces intense competition from small businesses to divisions of large multinational companies. For fiscal 2021, gains in the Food Safety segment were partially offset by a 30% drop in drug residue test kit sales due to competitive pressure and lower demand owing to poor economic conditions in European markets.
Estimate Trends
Neogen has been witnessing a positive estimate revision trend for next year. Over the past 90 days, the Zacks Consensus Estimate for its earnings has moved 4.11% north to 76 cents.
The Zacks Consensus Estimate for its second-quarter 2021 revenues is pegged at $129.1 million, suggesting 12.2% growth from the year-ago reported number.
Image: Bigstock
Here's Why You Should Add Neogen (NEOG) to Your Portfolio Now
Neogen Corporation (NEOG - Free Report) has been gaining from strength in the company’s Food Safety and Animal Safety business segments. The company’s better-than-expected results in the first quarter of fiscal 2022 buoy optimism. However, downsides may result from a stiff competitive landscape and foreign exchange fluctuations.
Over the past year, shares of this Zacks Rank #2 (Buy) company have outperformed the industry. The company has gained 24.6% compared with 5.7% growth of the industry.
The developer and marketer of food and animal safety products has a market capitalization of $4.66 billion. Its first-quarter fiscal 2022 earnings surpassed the Zacks Consensus Estimate by 6.7%.
Over the past five years, the company registered earnings growth of 8.6%, ahead of the industry’s 6.2% rise. The company projects 17.54% growth for the current year compared with the industry’s growth projection of 17.50%.
Let’s delve deeper.
Q1 Upsides: Neogen exited the first quarter of fiscal 2022 on a bullish note with better-than-expected revenues and earnings. The newly launched AccuPoint Advanced NG contributed to growth in environmental sanitation. The ThyroKare supplement drove revenues in the animal care products. The StandGuard product line also contributed to growth. Integration of the Megazyme product offerings into the company’s product portfolio looks encouraging as well. Neogen’s solid domestic and international performance across all businesses buoys optimism. Expansion of gross margin is an added advantage.
Product Launches: Neogen, of late, has been focusing on product launches to strengthen its business on a global scale.
In July 2021, Neogen released a new test capable of detecting the delta-9-tetrahydrocannabinol (Δ9-THC) cannabinoid levels in hemp plants. The new Reveal Q+ for Δ9-THC can accurately identify and report THC levels, ranging from 0.1% to 1.6%, allowing fast, reliable, and on-demand crop monitoring. In May 2021, Neogen launched the AccuPoint NG ATP Sanitation Monitoring System. The new sanitation monitoring system has been redesigned to be more user-friendly or offer rapid, accurate and easy to monitor test of data.
Strategic Partnership Deals: Of late, Neogen has inked a series of partnership deals, which are expected to aid in the company’s segmental growth and international expansion.
In June 2021, Neogen extended its strategic partnership with Gencove, Inc. The extended collaboration aims to continue the development of robust and innovative animal genomic testing. The company collaborated with Center for Aquaculture Technologies (CAT) to provide high-quality genotyping services to aquaculture producers in the same month. This partnership will bring together Neogen and CAT’s expertise to apply modern sequencing and genotyping technologies to aquaculture species.
Downsides
Currency Headwinds: In the first quarter of fiscal 2021, unfavorable currency movements significantly impacted Neogen’s international business. When the magnitude of the pandemic became evident and started spreading across the world, there was a move toward the safety of the U.S. dollar, negatively impacting local currencies in the company’s international locations, particularly those where the outbreaks were less controlled.
Competitive Landscape: Neogen faces intense competition from small businesses to divisions of large multinational companies. For fiscal 2021, gains in the Food Safety segment were partially offset by a 30% drop in drug residue test kit sales due to competitive pressure and lower demand owing to poor economic conditions in European markets.
Estimate Trends
Neogen has been witnessing a positive estimate revision trend for next year. Over the past 90 days, the Zacks Consensus Estimate for its earnings has moved 4.11% north to 76 cents.
The Zacks Consensus Estimate for its second-quarter 2021 revenues is pegged at $129.1 million, suggesting 12.2% growth from the year-ago reported number.
Other Key Picks
A few other similar-ranked stocks from the broader medical space are Envista Holdings Corporation (NVST - Free Report) , Henry Schein, Inc. (HSIC - Free Report) and Biolase, Inc. (BIOL - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of Zacks #1 Rank (Strong Buy) stocks here.
Envista Holdings has an estimated long-term earnings growth rate of 27%.
Henry Schein has an estimated long-term earnings growth rate of 14%.
Biolase has a projected long-term earnings growth rate of 15%.