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NEOGEN (NEOG) to Enter Retail Parasiticide Space With New Buyout

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NEOGEN Corporation (NEOG - Free Report) acquired CAPInnoVet, Inc., an Atlanta-based companion animal health company that provides pet medications to the veterinary market. The acquisition will enable NEOGEN to enter the retail parasiticide market. However, the terms of the agreement have been kept under wraps.

CAPInnoVet will become part of NEOGEN's Animal Safety business segment. Notably, the Animal Safety business division comprises veterinary instruments, pharmaceuticals, vaccines and diagnostic products.

Per NEOGEN management, the CAPInnoVet acquisition provides the company with a strategic pathway into the parasiticide market, while naturally aligning with its Animal Safety business segment.

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CAPInnoVet, a provider of differentiated companion animal health products, was founded in 2014. The company offers improved access to high-quality and high-value pet medications. Per CAPInnoVet management, the recent integration with NEOGEN will enable the company to not only advance its vision of providing high-quality pet medications at a significant value to pet owners but also join a company with similar values.

Industry Prospects

Per a report published in Persistence Market Research, the global animal parasiticides market is expected to witness a CAGR of 5.9% between 2015 and 2026. Factors such as growing awareness regarding animal healthcare, the increasing number of livestock animals and rising animal healthcare expenditure for animal welfare are driving the market. In addition, greater adoption of companion animals in the developed economies is expected to propel market growth.

 

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Per company data, the acquisition of CAPInnoVet will allow NEOGEN to tap the fast-growing retail parasiticide market, which is valued at more than $12 billion.

Given the substantial market prospects, the recent CAPInnoVet buyout seems strategic and well-timed.

Notable Developments

In July 2021, NEOGEN released the new Reveal Q+ for Δ9-THC, which is capable of detecting the delta-9-tetrahydrocannabinol (Δ9-THC) cannabinoid levels in hemp plants. The new test can accurately identify and report THC levels, ranging from 0.1% and 1.6%, allowing for fast, reliable and on-demand crop monitoring. The new test is intended for use with the company’s Raptor Solo Integrated Analysis Platform.

In June 2021, the company extended its partnership with Gencove, Inc. in order to continue developing robust and innovative animal genomic testing. Through the multi-year global agreement, Neogen can offer its SkimSeek low-pass sequencing technology to customers across the agricultural community.

In the same month, the company’s Soleris Direct Yeast and Mold test received AOAC Research Institute’s Performance Tested Methods Certification to assess yeasts and molds in dried cannabis flower [9-tetrahydrocannabinol (THC) >0.3%]. The recent authorization expands Soleris’ prior AOAC certifications for the semi-quantitative assessment of yeast and mold in diverse food products. The Soleris test offers the cannabis industry enhanced safety and security through the accurate detection of potentially harmful microorganisms within the industry.

Share Price Performance

The stock has underperformed its industry over the past year. It has grown 2.3% compared to the industry’s growth of 13%.

Zacks Rank and Key Picks

Currently, NEOGEN carries a Zacks Rank #3 (Hold).

A few better-ranked stocks from the Medical-Products industry are VAREX IMAGING (VREX - Free Report) , Envista Holdings Corporation (NVST - Free Report) and BellRing Brands, Inc. (BRBR - Free Report) , each presently carrying a Zacks Rank # 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

VAREX has a long-term earnings growth rate of 5%.

Envista Holdings has a long-term earnings growth rate of 27.4%.

BellRing Brands has a long-term earnings growth rate of 29.1%.