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Neogen (NEOG) Soars 8.2%: Is Further Upside Left in the Stock?

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Neogen (NEOG - Free Report) shares rallied 8.2% in the last trading session to close at $43.41. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 9% loss over the past four weeks.

Neogen scored a strong price increase on optimism surrounding its recent definitive agreement with 3M, under which the latter will separate its Food Safety business and combine it with Neogen.  This merger is anticipated to establish an innovative leader in the food safety sector, with a comprehensive product range and a strategic focus on the category’s long-term growth potential. Based on Neogen’s closing share price as of Dec 13, 2021, the combined company is expected to have an enterprise value of approximately $9.3 billion. The transaction is anticipated to close by the end of third-quarter 2022, subject to approval by Neogen shareholders, receipt of necessary regulatory clearances and fulfillment of other customary closing conditions.

This maker of medical testing kits is expected to post quarterly earnings of $0.17 per share in its upcoming report, which represents a year-over-year change of +13.3%. Revenues are expected to be $129.06 million, up 12.2% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Neogen, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on NEOG going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>


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