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NEOGEN (NEOG) Strengthens Global Foothold With Delf Buyout

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NEOGEN (NEOG - Free Report) recently acquired UK-based Delf, an animal hygiene and industrial cleaning products maker. The consolidation is aimed to broaden NEOGEN's offerings in dairy chemicals.

However, the financial terms of the deal have been kept under wraps.

A Few Words on Delf

From one of the main soap manufacturers in Liverpool, Delf now has grown to offer a comprehensive range of animal hygiene and specialty chemical products. The company, which was founded in 1928, is currently a select member of the Iodine Registration Group (IRG). This allows it to supply Article 95 PVP-iodine and iodine-based biocidal products to UK and European Union animal hygiene markets.

NEOGEN management believes that Delf’s 40 years of experience in the UK dairy hygiene market will help it to strengthen its foothold in this region’s dairy chemicals market. The acquisition is expected to hold high synergy benefits as Delf's products complement NEOGEN’s Quat-Chem disinfectant and cleaner offerings.

Industry Prospects

According to a comprehensive research report by Market Research Future (MRFR) published in GlobeNewswire, the animal health market is predicted to reach $99 billion by 2028, registering a CAGR of 8.5%.

NEOG's Fast-Growing Global Business

NEOGEN’s international business reported impressive first-quarter fiscal 2022 results with 20% year-over-year growth. This was driven in part by the Megazyme acquisition and currency tailwinds from a stronger British pound and Mexican peso.

Zacks Investment ResearchImage Source: Zacks Investment Research

Revenues from NEOGEN’s worldwide animal genomics business increased 14% in the fiscal first quarter on a year-over-year basis. The upside was primarily driven by continued strength in beef and dairy cattle, swine, and sheep genotyping coupled with revenues from a large non-recurring plant research project.

NEOGEN’s revenues from China in the first quarter of fiscal 2022 increased 59%, driven by new sales of Megazyme products and solid growth in genomics. Neogen Australasia revenues surged 41% in local currency on growth in beef and companion animal genomic services. Meanwhile, NEOGEN’s Latinoamerica business was up 4% while its Brazilian operations were down 17% in local currency in the fiscal first quarter.

Share Price Performance

The stock has outperformed its industry over the past year. It has grown 4.8% against the industry’s 6.6% drop.

Zacks Rank and Key Picks

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

A few better-ranked stocks in the broader medical space are Varex Imaging Corporation (VREX - Free Report) , Omnicell, Inc. (OMCL - Free Report) and NextGen Healthcare, Inc. (NXGN - Free Report) .

Varex, carrying a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 5%. The company surpassed earnings estimates in the trailing four quarters, delivering an average surprise of 115.3%. You can see the complete list of today’s Zacks #1 Rank  stocks here.

Varex has outperformed the industry it belongs to in the past year. VREX has gained 75.6% versus the industry’s 5% decline.

Omnicell, carrying a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 16%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 17.4%, on average.

Omnicell has outperformed its industry over the past year. OMCL has gained 63.7% against the 38.5% industry decline.

NextGen, carrying a Zacks Rank #2, has a long-term earnings growth rate of 8.5%. The company surpassed earnings estimates in the trailing four quarters, delivering an average surprise of 16%.

NextGen has outperformed its industry over the past year. NXGN stock has declined 12.3% compared with the industry’s 38.5% fall.