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Neogen (NEOG) Earnings and Revenues Meet Estimates in Q3
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Neogen Corp (NEOG - Free Report) reported adjusted earnings of 27 cents per share in the third quarter of fiscal 2017. The figure was in line with the Zacks Consensus Estimate and increased 22.7% from the year-ago quarter.
Revenues increased 14.2% on a year-over-year basis to $88 million, flat with the Zacks Consensus Estimate.
The price performance of Neogen has been disappointing of late.
Over the last three months, the stock lost 1.4%, comparing unfavorably with the Zacks classified Medical Products sub-industry’s stellar return of roughly 9.9%. Furthermore, the stock’s current return is below the S&P 500’s return of 5.2% over the same time frame.
We note that Neogen carries a Zacks Rank #2 (Buy).
Revenue Details
Food Safety Segment: Revenues at Neogen’s food safety segment totaled $42.9 million. Notably, revenues in the segment jumped 23.8% in the third quarter, with overall organic growth of 12%. Growth was majorly fueled by strength in number of existing product lines and recent acquisitions. Furthermore, increased testing for the toxins especially in the U.S., Canada and Europe buoyed sales in the segment.
We also note that sales in the segment were driven by higher sales of food allergen tests such as gluten, milk and peanuts that surged 14% in the quarter, courtesy of the global food allergen regulatory efforts.
Animal Safety Segment: The animal safety segment recorded revenues of $50.5 million, an increase of 8.1% from the year-ago quarter. Growth at the segment was mainly driven by sales of the company's rapid tests to detect drug residues in forensic samples.
On the flipside, Neogen witnessed a decline in sales of small animal supplements, thanks to the market withdrawal of canine products. Sales of Neogen's rodenticides also declined in the quarter.
Genomics Unit: The genomics business unit had an impressive performance as it recorded a 20% increase on a year-over-year basis. Per management, growth in this business unit was fueled by expansion of the company's testing facilities in Scotland, development of new genomic testing products and the acquisition of Brazil-based Deoxi in early 2016.
Margin Details
Adjusted gross margin expanded 40 basis points (bps) to 46.3% in the quarter, courtesy of the favorable shift in product mix. However, adverse currency translations kept gross margin under pressure in the reported quarter.
Operating income was $14.4 million or 16.2% of sales, in the third quarter, compared with $11.3 million or 14.7% in the same quarter a year ago.
Our take
We believe that accretive acquisitions and expanding international footprint will drive Neogen’s overall results in fiscal 2017. Moreover, the company has a broad portfolio of innovative disinfectant products and more than 100 EPA and FDA-registered products, which strengthen the company’s market position globally.
Key Picks
Other favorably ranked stocks in the broader medical sector include Inogen Inc. (INGN - Free Report) , Avinger, Inc. (AVGR - Free Report) and Fluidigm Corporation . Notably, Inogen sports a Zacks Rank #1 (Strong Buy) while Fluidigm and Avinger carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Inogen has a long-term expected earnings growth rate of 17.05%. Notably, the stock represents an impressive one-year return of 82%.
Avinger projects sales growth of 30.6% for the current year. Additionally, the company has a projected EPS growth rate 39.53% for the current fiscal.
Fluidigm Corporation has a long-term expected earnings growth rate of 25%. The stock posted a positive earnings surprise of 1.6% in the last reported quarter.
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Neogen (NEOG) Earnings and Revenues Meet Estimates in Q3
Neogen Corp (NEOG - Free Report) reported adjusted earnings of 27 cents per share in the third quarter of fiscal 2017. The figure was in line with the Zacks Consensus Estimate and increased 22.7% from the year-ago quarter.
Revenues increased 14.2% on a year-over-year basis to $88 million, flat with the Zacks Consensus Estimate.
Share Price Trend
The price performance of Neogen has been disappointing of late.
Over the last three months, the stock lost 1.4%, comparing unfavorably with the Zacks classified Medical Products sub-industry’s stellar return of roughly 9.9%. Furthermore, the stock’s current return is below the S&P 500’s return of 5.2% over the same time frame.
We note that Neogen carries a Zacks Rank #2 (Buy).
Revenue Details
Food Safety Segment: Revenues at Neogen’s food safety segment totaled $42.9 million. Notably, revenues in the segment jumped 23.8% in the third quarter, with overall organic growth of 12%. Growth was majorly fueled by strength in number of existing product lines and recent acquisitions. Furthermore, increased testing for the toxins especially in the U.S., Canada and Europe buoyed sales in the segment.
We also note that sales in the segment were driven by higher sales of food allergen tests such as gluten, milk and peanuts that surged 14% in the quarter, courtesy of the global food allergen regulatory efforts.
Animal Safety Segment: The animal safety segment recorded revenues of $50.5 million, an increase of 8.1% from the year-ago quarter. Growth at the segment was mainly driven by sales of the company's rapid tests to detect drug residues in forensic samples.
On the flipside, Neogen witnessed a decline in sales of small animal supplements, thanks to the market withdrawal of canine products. Sales of Neogen's rodenticides also declined in the quarter.
Genomics Unit: The genomics business unit had an impressive performance as it recorded a 20% increase on a year-over-year basis. Per management, growth in this business unit was fueled by expansion of the company's testing facilities in Scotland, development of new genomic testing products and the acquisition of Brazil-based Deoxi in early 2016.
Margin Details
Adjusted gross margin expanded 40 basis points (bps) to 46.3% in the quarter, courtesy of the favorable shift in product mix. However, adverse currency translations kept gross margin under pressure in the reported quarter.
Operating income was $14.4 million or 16.2% of sales, in the third quarter, compared with $11.3 million or 14.7% in the same quarter a year ago.
Our take
We believe that accretive acquisitions and expanding international footprint will drive Neogen’s overall results in fiscal 2017. Moreover, the company has a broad portfolio of innovative disinfectant products and more than 100 EPA and FDA-registered products, which strengthen the company’s market position globally.
Key Picks
Other favorably ranked stocks in the broader medical sector include Inogen Inc. (INGN - Free Report) , Avinger, Inc. (AVGR - Free Report) and Fluidigm Corporation . Notably, Inogen sports a Zacks Rank #1 (Strong Buy) while Fluidigm and Avinger carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Inogen has a long-term expected earnings growth rate of 17.05%. Notably, the stock represents an impressive one-year return of 82%.
Avinger projects sales growth of 30.6% for the current year. Additionally, the company has a projected EPS growth rate 39.53% for the current fiscal.
Fluidigm Corporation has a long-term expected earnings growth rate of 25%. The stock posted a positive earnings surprise of 1.6% in the last reported quarter.
5 Trades Could Profit ""Big-League"" from Trump Policies
If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure. See these buy recommendations now >>