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Neogen (NEOG) Benefits From Advanced Portfolio, Global Growth
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Neogen (NEOG - Free Report) is well positioned to gain from its extensive global foothold and diverse product mix. The company’s long-term growth strategy looks impressive. Yet, global macroeconomic issues continue to put pressure on Neogen's vast international trade. The stock currently carries a Zacks Rank #2 (Buy).
Neogen exited the first quarter of fiscal 2023 with better-than-expected earnings. Its overall organic revenue growth, excluding the currency impact, was 4% for the quarter. Inorganically, the acquisitions of CAPInnoVet, Delf, GVS and Thai-Neo Biotech contributed to the top line.
The company recorded sales growth across the Food Safety and Animal Safety segments. Animal Safety revenues in the fiscal first quarter were up 3% (up 4% at CER) year over year. The upside can be attributed to 21% growth in sales of animal care products, including supplements, vitamin injectables, and companion animal parasiticides, enhanced by the acquisition of CAPInnoVet in September 2021.
This growth was also driven by increases across the company’s biosecurity portfolio, which included a 14% increase in insect control products and a 7% increase in cleaners and disinfectants over the same period in the prior year.
Neogen continues to see rising revenues from the Food Safety business. For first-quarter fiscal 2023, Food Safety revenues improved 3% (up 9% at constant exchange rate or CER) year over year. The upside was driven by a 25% increase in aflatoxin test kits, primarily due to an aflatoxin outbreak in Brazil and new business in Mexico and Central America.
Barring Australia and China, solid international operations also buoy optimism. The expansion in the gross margin is an added advantage.
Neogen, of late, has been focusing on product launches to strengthen its business on a global scale. In September, Neogen launched its Veratox VIP assay to detect cashew allergens. The same month, the company launched its new Encompass platform for bovine genomic results management and visualization. In October, it launched COMPANION RTU, a ready-to-use formulation of its COMPANION disinfectant.
In June 2022, Neogen launched the Prozap Gamma-Defense Insect Control Solution for poultry producers. In May 2022, the company, in collaboration with Gencove, launched InfiniSEEK — an innovative, cost-effective solution for whole genome sequencing and targeted SNP analysis.
On the flip side, Neogen exited the first quarter of fiscal 2023 with lower-than-expected revenues. The company observed that customers reduced testing volumes where they could. The company also reported prolonged pipelines, especially with regard to equipment sales.
Increases in aflatoxin test kits, Soleris consumables and food quality test kits were offset by a significant decline in Soleris equipment due to a difficult comparison against strong sales in the prior year. Also, allergen and environmental sanitation product lines declined due to reduced buying patterns from customers and supply chain disruptions on certain products.
A decline in operating profit on mounting operating costs does not bode well. The ongoing supply chain disruptions and inflationary pressure continue to pose challenges for the company.
Shares of Neogen have underperformed the industry over the past year. The stock has declined 68% compared with the industry’s 44.8% decline.
Other Key Picks
A few other top-ranked stocks in the broader medical space that investors can consider are ShockWave Medical, Inc. (SWAV - Free Report) , Orthofix Medical Inc. (OFIX - Free Report) and Merit Medical System (MMSI - Free Report) .
ShockWave Medical, carrying a Zacks Rank #2 at present, has an estimated growth rate of 33.1% for 2023. The company’s earnings surpassed estimates in all the trailing four quarters, the average beat being 180.1%.
ShockWave Medical has outperformed its industry in the past year. SWAV has gained 35% against the industry’s 32.6% decline in the past year.
Orthofix Medical, currently sporting a Zacks Rank #1 (Strong Buy), reported third-quarter 2022 adjusted EPS of 13 cents, which beat the Zacks Consensus Estimate by a stupendous 550%. Revenues of $114 million outpaced the consensus mark by 2.7%.
OFIX has an estimated next-year growth rate of 58.97%. OFIX’s earnings surpassed estimates in the trailing three quarters and missed in one, the average being 129.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Merit Medical, currently carrying a Zacks Rank of 2, reported third-quarter 2022 adjusted EPS of 64 cents, which beat the Zacks Consensus Estimate by 20.8%. Revenues of $287.2 million outpaced the consensus mark by 5.2%.
Merit Medical has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average being 25.4%.
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Neogen (NEOG) Benefits From Advanced Portfolio, Global Growth
Neogen (NEOG - Free Report) is well positioned to gain from its extensive global foothold and diverse product mix. The company’s long-term growth strategy looks impressive. Yet, global macroeconomic issues continue to put pressure on Neogen's vast international trade. The stock currently carries a Zacks Rank #2 (Buy).
Neogen exited the first quarter of fiscal 2023 with better-than-expected earnings. Its overall organic revenue growth, excluding the currency impact, was 4% for the quarter. Inorganically, the acquisitions of CAPInnoVet, Delf, GVS and Thai-Neo Biotech contributed to the top line.
The company recorded sales growth across the Food Safety and Animal Safety segments. Animal Safety revenues in the fiscal first quarter were up 3% (up 4% at CER) year over year. The upside can be attributed to 21% growth in sales of animal care products, including supplements, vitamin injectables, and companion animal parasiticides, enhanced by the acquisition of CAPInnoVet in September 2021.
This growth was also driven by increases across the company’s biosecurity portfolio, which included a 14% increase in insect control products and a 7% increase in cleaners and disinfectants over the same period in the prior year.
Neogen Corporation Price
Neogen Corporation price | Neogen Corporation Quote
Neogen continues to see rising revenues from the Food Safety business. For first-quarter fiscal 2023, Food Safety revenues improved 3% (up 9% at constant exchange rate or CER) year over year. The upside was driven by a 25% increase in aflatoxin test kits, primarily due to an aflatoxin outbreak in Brazil and new business in Mexico and Central America.
Barring Australia and China, solid international operations also buoy optimism. The expansion in the gross margin is an added advantage.
Neogen, of late, has been focusing on product launches to strengthen its business on a global scale. In September, Neogen launched its Veratox VIP assay to detect cashew allergens. The same month, the company launched its new Encompass platform for bovine genomic results management and visualization. In October, it launched COMPANION RTU, a ready-to-use formulation of its COMPANION disinfectant.
In June 2022, Neogen launched the Prozap Gamma-Defense Insect Control Solution for poultry producers. In May 2022, the company, in collaboration with Gencove, launched InfiniSEEK — an innovative, cost-effective solution for whole genome sequencing and targeted SNP analysis.
On the flip side, Neogen exited the first quarter of fiscal 2023 with lower-than-expected revenues. The company observed that customers reduced testing volumes where they could. The company also reported prolonged pipelines, especially with regard to equipment sales.
Increases in aflatoxin test kits, Soleris consumables and food quality test kits were offset by a significant decline in Soleris equipment due to a difficult comparison against strong sales in the prior year. Also, allergen and environmental sanitation product lines declined due to reduced buying patterns from customers and supply chain disruptions on certain products.
A decline in operating profit on mounting operating costs does not bode well. The ongoing supply chain disruptions and inflationary pressure continue to pose challenges for the company.
Shares of Neogen have underperformed the industry over the past year. The stock has declined 68% compared with the industry’s 44.8% decline.
Other Key Picks
A few other top-ranked stocks in the broader medical space that investors can consider are ShockWave Medical, Inc. (SWAV - Free Report) , Orthofix Medical Inc. (OFIX - Free Report) and Merit Medical System (MMSI - Free Report) .
ShockWave Medical, carrying a Zacks Rank #2 at present, has an estimated growth rate of 33.1% for 2023. The company’s earnings surpassed estimates in all the trailing four quarters, the average beat being 180.1%.
ShockWave Medical has outperformed its industry in the past year. SWAV has gained 35% against the industry’s 32.6% decline in the past year.
Orthofix Medical, currently sporting a Zacks Rank #1 (Strong Buy), reported third-quarter 2022 adjusted EPS of 13 cents, which beat the Zacks Consensus Estimate by a stupendous 550%. Revenues of $114 million outpaced the consensus mark by 2.7%.
OFIX has an estimated next-year growth rate of 58.97%. OFIX’s earnings surpassed estimates in the trailing three quarters and missed in one, the average being 129.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Merit Medical, currently carrying a Zacks Rank of 2, reported third-quarter 2022 adjusted EPS of 64 cents, which beat the Zacks Consensus Estimate by 20.8%. Revenues of $287.2 million outpaced the consensus mark by 5.2%.
Merit Medical has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average being 25.4%.