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Neogen (NEOG) Rises 7.9% Since Q1 Earnings: What's Driving It?
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Shares of Neogen Corporation (NEOG - Free Report) have rallied 7.9% compared with the industry's 6.7% rise since its first-quarter fiscal 2023 earnings released on Sep 27.
The developer and marketer of food and animal safety products has a market capitalization of $3.32 billion. Its earnings in the first quarter of fiscal 2023 surpassed the Zacks Consensus Estimate by 6.3%.
This Zacks Rank #2 (Buy) company has a favorable Value Score of B. The Value Score helps find stocks that are undervalued. Back-tested results have shown that stocks with a favorable Value Score, when combined with a solid Zacks Rank, are the best investment bets.
The rally was largely driven by recent product launches. The company’s strong global presence raises optimism. A stable solvency position continues to favor the stock.
Let’s take a quick look at the important catalysts to understand this positive trend.
Key Growth Catalysts
Product Launches: Of late, Neogen has been focusing on product launches to strengthen its business on a global scale.
In September, Neogen launched its Veratox VIP assay to detect cashew allergens. In the same month, the company launched its new Encompass platform for bovine genomic results management and visualization. In October, Neogen launched COMPANION RTU, a ready-to-use formulation of its COMPANION disinfectant.
In June 2022, Neogen launched the Prozap Gamma-Defense Insect Control Solution for poultry producers. In May 2022, the company, in collaboration with Gencove, launched InfiniSEEK — an innovative, cost-effective solution for whole genome sequencing and targeted SNP analysis.
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Moreover, in May, the company unveiled an enhanced version of the Veratox for Peanut allergen test. In February 2022, Neogen added a new chemiluminescent substrate as part of the trusted K-Blue product line.
International Business Holds Solid Ground: NEOG’s international business reported impressive results in the first quarter of fiscal 2023. International revenues rose 2% (up 10% excluding currency headwinds).
Neogen’s U.K. operations posted a 5% increase when sales were converted to U.S. dollars or were up 19% in pounds, partially due to the contribution of Delf, the cleaner and disinfectant business in Liverpool that the company acquired in November 2021.
Organic growth for the U.K. operation in pounds was 12%, led by the strength of aflatoxin test kits, cleaners and disinfectants, genomic services, vet instruments and animal care products. At NEOG’s Brazilian operations, fiscal 2023 first-quarter sales increased 13%, driven by the strong sales of aflatoxin and deoxynivalenol test kits as the increased presence of these mycotoxins during the harvest season requires more testing.
Strong Solvency & Capital Structure: Neogen exited the fiscal first quarter with cash and investments of $348 million compared with $381 million at the end of the fiscal fourth quarter 2022.
The company had no debt on the balance sheet at the quarter-end. This indicates a strong solvency position of the company.
Favorable Parameters
For 2024, Neogen has an expected earnings growth rate of 18.75%. Meanwhile, revenues are expected to grow 16.39% on a year-over-year basis.
Neogen has a current earnings yield ratio of 1.63% against the industry’s (4.14%). The stock’s Cash/Price ratio stands at 0.22% compared with the industry’s 0.17%.
Other Key Picks
Some other top-ranked stocks from the broader medical space that investors can consider are ShockWave Medical, Inc. (SWAV - Free Report) , Orthofix Medical Inc. (OFIX - Free Report) and Merit Medical System (MMSI - Free Report) .
ShockWave Medical, carrying a Zacks Rank #2 at present, has an estimated growth rate of 33.1% for 2023. The company’s earnings surpassed estimates in all the trailing four quarters, the average beat being 180.1%.
ShockWave Medical has outperformed its industry in the past year. SWAV has risen 35% against the industry’s 32.6% fall in the past year.
Orthofix Medical, currently sporting a Zacks Rank #1 (Strong Buy), reported a third-quarter 2022 adjusted EPS of 13 cents, which beat the Zacks Consensus Estimate by a stupendous 550%. Revenues of $114 million outpaced the consensus mark by 2.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Orthofix Medical has an estimated next-year growth rate of 58.97%. OFIX’s earnings surpassed estimates in the trailing three quarters and missed in one, the average being 129.1%.
Merit Medical, currently carrying a Zacks Rank of 2, reported a third-quarter 2022 adjusted EPS of 64 cents, which beat the Zacks Consensus Estimate by 20.8%. Revenues of $287.2 million outpaced the consensus mark by 5.2%.
Merit Medical has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average being 25.4%.
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Neogen (NEOG) Rises 7.9% Since Q1 Earnings: What's Driving It?
Shares of Neogen Corporation (NEOG - Free Report) have rallied 7.9% compared with the industry's 6.7% rise since its first-quarter fiscal 2023 earnings released on Sep 27.
The developer and marketer of food and animal safety products has a market capitalization of $3.32 billion. Its earnings in the first quarter of fiscal 2023 surpassed the Zacks Consensus Estimate by 6.3%.
This Zacks Rank #2 (Buy) company has a favorable Value Score of B. The Value Score helps find stocks that are undervalued. Back-tested results have shown that stocks with a favorable Value Score, when combined with a solid Zacks Rank, are the best investment bets.
The rally was largely driven by recent product launches. The company’s strong global presence raises optimism. A stable solvency position continues to favor the stock.
Let’s take a quick look at the important catalysts to understand this positive trend.
Key Growth Catalysts
Product Launches: Of late, Neogen has been focusing on product launches to strengthen its business on a global scale.
In September, Neogen launched its Veratox VIP assay to detect cashew allergens. In the same month, the company launched its new Encompass platform for bovine genomic results management and visualization. In October, Neogen launched COMPANION RTU, a ready-to-use formulation of its COMPANION disinfectant.
In June 2022, Neogen launched the Prozap Gamma-Defense Insect Control Solution for poultry producers. In May 2022, the company, in collaboration with Gencove, launched InfiniSEEK — an innovative, cost-effective solution for whole genome sequencing and targeted SNP analysis.
Moreover, in May, the company unveiled an enhanced version of the Veratox for Peanut allergen test. In February 2022, Neogen added a new chemiluminescent substrate as part of the trusted K-Blue product line.
International Business Holds Solid Ground: NEOG’s international business reported impressive results in the first quarter of fiscal 2023. International revenues rose 2% (up 10% excluding currency headwinds).
Neogen’s U.K. operations posted a 5% increase when sales were converted to U.S. dollars or were up 19% in pounds, partially due to the contribution of Delf, the cleaner and disinfectant business in Liverpool that the company acquired in November 2021.
Organic growth for the U.K. operation in pounds was 12%, led by the strength of aflatoxin test kits, cleaners and disinfectants, genomic services, vet instruments and animal care products. At NEOG’s Brazilian operations, fiscal 2023 first-quarter sales increased 13%, driven by the strong sales of aflatoxin and deoxynivalenol test kits as the increased presence of these mycotoxins during the harvest season requires more testing.
Strong Solvency & Capital Structure: Neogen exited the fiscal first quarter with cash and investments of $348 million compared with $381 million at the end of the fiscal fourth quarter 2022.
The company had no debt on the balance sheet at the quarter-end. This indicates a strong solvency position of the company.
Favorable Parameters
For 2024, Neogen has an expected earnings growth rate of 18.75%. Meanwhile, revenues are expected to grow 16.39% on a year-over-year basis.
Neogen has a current earnings yield ratio of 1.63% against the industry’s (4.14%). The stock’s Cash/Price ratio stands at 0.22% compared with the industry’s 0.17%.
Other Key Picks
Some other top-ranked stocks from the broader medical space that investors can consider are ShockWave Medical, Inc. (SWAV - Free Report) , Orthofix Medical Inc. (OFIX - Free Report) and Merit Medical System (MMSI - Free Report) .
ShockWave Medical, carrying a Zacks Rank #2 at present, has an estimated growth rate of 33.1% for 2023. The company’s earnings surpassed estimates in all the trailing four quarters, the average beat being 180.1%.
ShockWave Medical has outperformed its industry in the past year. SWAV has risen 35% against the industry’s 32.6% fall in the past year.
Orthofix Medical, currently sporting a Zacks Rank #1 (Strong Buy), reported a third-quarter 2022 adjusted EPS of 13 cents, which beat the Zacks Consensus Estimate by a stupendous 550%. Revenues of $114 million outpaced the consensus mark by 2.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Orthofix Medical has an estimated next-year growth rate of 58.97%. OFIX’s earnings surpassed estimates in the trailing three quarters and missed in one, the average being 129.1%.
Merit Medical, currently carrying a Zacks Rank of 2, reported a third-quarter 2022 adjusted EPS of 64 cents, which beat the Zacks Consensus Estimate by 20.8%. Revenues of $287.2 million outpaced the consensus mark by 5.2%.
Merit Medical has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average being 25.4%.