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Neogen Corporation (NEOG - Free Report) is well poised to gain in the coming quarters, backed by the focus on product launches to strengthen its business on a global scale. The recent performances of both the Food and Animal Safety segments are encouraging. Yet, the company’s operations are prone to macroeconomic challenges, as well as competitive disadvantages, which raise concerns.
In the past year, this Zacks Rank #2 (Buy) stock has gained 31.1% against the 1.1% fall of the industry and the 22.6% increase of the S&P 500.
The renowned food and animal safety products provider has a market capitalization of $3.70 billion. The company has an estimated earnings growth rate of 32.2% for fiscal 2025 compared with the industry’s 22.2%. In the trailing four quarters, NEOG delivered an average earnings surprise of 126.5%.
Let’s delve deeper.
Factors at Play
Product Launches: Neogen’s spree of product launches continues with the latest Veratox VIP assay for the detection of walnuts, the third assay in the company’s Veratox VIP line of enhanced quantitative ELISA products. In August 2023, Neogen launched Igenity Enhanced Dairy, a new and progressive genomic data management tool.
Image Source: Zacks Investment Research
The same month, Neogen launched an extensive selection of new genetic tests through Paw Print Genetics and Canine HealthCheck solutions. These new tests can identify genetic sequences associated with potential diseases and other traits and can provide invaluable insights into a canine’s genetic composition. Earlier in June 2023, the company launched My CatScan 2.0, a significantly upgraded and improved version of the test from a leader in cat genetic screening.
Food Safety Sales Growth Continues: Revenues from the Food Safety segment in the fiscal first quarter increased 157.2% compared with the prior year, including core growth of 4.5%. Core growth within this segment was led by the Bacterial & General Sanitation product category, which benefited from new microbiological testing businesses in the United States and the United Kingdom and solid growth in the Natural Toxins and Allergens product category.
Animal Safety Business Grows Well: Neogen’s Animal Safety segment is gaining from solid performances of the complete line of consumable products marketed to veterinarians and animal health product distributors. Further, its genomic identification and related interpretive bioinformatics services are also showing strong prospects.
The Animal Safety business continues to grow, led by sales of vet instruments and disposables and a new line of business with a large retail customer. Within the biosecurity portfolio, Neogen continues to grow solidly in cleaners, disinfectants and rodenticides. During the first quarter of fiscal 2024, within worldwide genomics, the company registered solid growth in international beef markets and companion animal testing.
Downsides
Global Economic Problems Dent Growth: Neogen’s international business continues to be impacted by currency movements. Further, government and insurance companies continue to look for ways to contain the rising cost of healthcare. This may put pressure on players in the healthcare industry, with Neogen being no exception.
Although the company is gradually coming out of the impact of the two-and-a-half-year-long healthcare crisis, deteriorating international trade, global inflationary pressure leading to a tough situation related to raw material and labor costs, as well as freight charges and rising interest rates, all have put the medical device space in a tight spot.
Competitive Landscape Tough: Neogen faces intense competition from companies ranging from small businesses to divisions of large multinational companies. Historically, it has faced competition on the basis of the development of new technologies by its competitors, which could affect the marketability and profitability of NEOG’s products.
Estimate Trend
In the past 30 days, the Zacks Consensus Estimate for Neogen’s earnings for 2023 has remained constant at 59 cents.
The Zacks Consensus Estimate for 2023 revenues is pegged at $960.9 million, suggesting a 16.8% rise from the 2022 reported number.
Haemonetics has an estimated earnings growth rate of 28.4% for fiscal 2024 compared with the industry’s 15.4%. HAE’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 16.1%. Its shares have gained 13.3% compared with the industry’s 1.1% fall in the past year.
Insulet, sporting a Zacks Rank #1 at present, has a long-term estimated earnings growth rate of 39.2% compared with the industry’s 11.8%. Shares of the company have lost 30.9% compared with the industry’s 1.2% decline over the past year.
PODD’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 105.1%. In the last reported quarter, it delivered an average earnings surprise of 77.5%.
DexCom, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 33.6% compared with the industry’s 13.3%. Shares of DXCM have lost 7.4% compared with the industry’s 2.9% decline over the past year.
DXCM’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 36.4%. In the last reported quarter, it delivered an average earnings surprise of 47.1%.
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Here's Why You Should Buy Neogen (NEOG) Stock Now
Neogen Corporation (NEOG - Free Report) is well poised to gain in the coming quarters, backed by the focus on product launches to strengthen its business on a global scale. The recent performances of both the Food and Animal Safety segments are encouraging. Yet, the company’s operations are prone to macroeconomic challenges, as well as competitive disadvantages, which raise concerns.
In the past year, this Zacks Rank #2 (Buy) stock has gained 31.1% against the 1.1% fall of the industry and the 22.6% increase of the S&P 500.
The renowned food and animal safety products provider has a market capitalization of $3.70 billion. The company has an estimated earnings growth rate of 32.2% for fiscal 2025 compared with the industry’s 22.2%. In the trailing four quarters, NEOG delivered an average earnings surprise of 126.5%.
Let’s delve deeper.
Factors at Play
Product Launches: Neogen’s spree of product launches continues with the latest Veratox VIP assay for the detection of walnuts, the third assay in the company’s Veratox VIP line of enhanced quantitative ELISA products. In August 2023, Neogen launched Igenity Enhanced Dairy, a new and progressive genomic data management tool.
Image Source: Zacks Investment Research
The same month, Neogen launched an extensive selection of new genetic tests through Paw Print Genetics and Canine HealthCheck solutions. These new tests can identify genetic sequences associated with potential diseases and other traits and can provide invaluable insights into a canine’s genetic composition. Earlier in June 2023, the company launched My CatScan 2.0, a significantly upgraded and improved version of the test from a leader in cat genetic screening.
Food Safety Sales Growth Continues: Revenues from the Food Safety segment in the fiscal first quarter increased 157.2% compared with the prior year, including core growth of 4.5%. Core growth within this segment was led by the Bacterial & General Sanitation product category, which benefited from new microbiological testing businesses in the United States and the United Kingdom and solid growth in the Natural Toxins and Allergens product category.
Animal Safety Business Grows Well: Neogen’s Animal Safety segment is gaining from solid performances of the complete line of consumable products marketed to veterinarians and animal health product distributors. Further, its genomic identification and related interpretive bioinformatics services are also showing strong prospects.
The Animal Safety business continues to grow, led by sales of vet instruments and disposables and a new line of business with a large retail customer. Within the biosecurity portfolio, Neogen continues to grow solidly in cleaners, disinfectants and rodenticides. During the first quarter of fiscal 2024, within worldwide genomics, the company registered solid growth in international beef markets and companion animal testing.
Downsides
Global Economic Problems Dent Growth: Neogen’s international business continues to be impacted by currency movements. Further, government and insurance companies continue to look for ways to contain the rising cost of healthcare. This may put pressure on players in the healthcare industry, with Neogen being no exception.
Although the company is gradually coming out of the impact of the two-and-a-half-year-long healthcare crisis, deteriorating international trade, global inflationary pressure leading to a tough situation related to raw material and labor costs, as well as freight charges and rising interest rates, all have put the medical device space in a tight spot.
Competitive Landscape Tough: Neogen faces intense competition from companies ranging from small businesses to divisions of large multinational companies. Historically, it has faced competition on the basis of the development of new technologies by its competitors, which could affect the marketability and profitability of NEOG’s products.
Estimate Trend
In the past 30 days, the Zacks Consensus Estimate for Neogen’s earnings for 2023 has remained constant at 59 cents.
The Zacks Consensus Estimate for 2023 revenues is pegged at $960.9 million, suggesting a 16.8% rise from the 2022 reported number.
Other Key Picks
Some other top-ranked stocks in the broader medical space are Haemonetics (HAE - Free Report) , Insulet (PODD - Free Report) and DexCom (DXCM - Free Report) .
Haemonetics has an estimated earnings growth rate of 28.4% for fiscal 2024 compared with the industry’s 15.4%. HAE’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 16.1%. Its shares have gained 13.3% compared with the industry’s 1.1% fall in the past year.
HAE carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Insulet, sporting a Zacks Rank #1 at present, has a long-term estimated earnings growth rate of 39.2% compared with the industry’s 11.8%. Shares of the company have lost 30.9% compared with the industry’s 1.2% decline over the past year.
PODD’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 105.1%. In the last reported quarter, it delivered an average earnings surprise of 77.5%.
DexCom, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 33.6% compared with the industry’s 13.3%. Shares of DXCM have lost 7.4% compared with the industry’s 2.9% decline over the past year.
DXCM’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 36.4%. In the last reported quarter, it delivered an average earnings surprise of 47.1%.