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Neogen's (NEOG) New Launches Aid, Margin Pressure Stays
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Neogen (NEOG - Free Report) is well positioned to gain from its extensive global foothold and diverse product mix. The company’s long-term growth strategy looks impressive. Global macroeconomic issues continue to put pressure on Neogen's vast international operation. The stock carries a Zacks Rank #3 (Hold).
Neogen exited the second quarter of fiscal 2023, with better-than-expected earnings and revenues. The company recorded sales growth across the Food Safety and Animal Safety segments.
Animal Safety revenues in the fiscal second quarter were up 8.4% year over year, consisting of 6.9% core growth, 2.4% from acquisitions and a foreign currency headwind of 0.9%. The core growth was led by the company’s portfolio of biosecurity products, driven largely by share gains in the animal protein market, sales of dairy hygiene products and new insect control products. The company’s line of parasiticides, acquired in September 2021, and veterinary instruments both reported an increase in market share gains.
Neogen continues to see rising revenues from the Food Safety business. For second-quarter fiscal 2023, Food Safety revenues improved 140.3% year over year, consisting of 6.3% core growth and 140.5% from acquisitions.
The core growth was led by the Culture Media & Other category, where the Company’s Petrifilm product line performed well, as did Neogen Analytics services. Customer demand increased significantly for the company’s software as a service that combines food safety analytics, data aggregation and digital services on a single platform. Within the Bacterial & General Sanitation category, the company’s AccuPoint general sanitation product line saw solid core growth, while in Natural Toxins, Allergens & Drug Residues, sales of aflatoxin test kits were up significantly from increased demand related to domestic and international grain harvests.
Of late, Neogen has inked a series of partnership deals, which are expected to aid in the company’s segmental growth as well as international expansion.
In 2022, Neogen completed its merger with 3M to combine the latter’s Food Safety Business with its existing operations. In 2021, Neogen extended its strategic partnership with Gencove, Inc. Through this multi-year global agreement, Neogen can offer its SkimSeek low-pass sequencing technology to customers across the agricultural community.
On the flip side, during the fiscal second quarter, Neogen registered lower sales of rapid microbial testing products. Moreover, Allergen test kits were roughly flat due to softening market conditions and supply disruptions for certain products, while drug residue test kits were down primarily due to lower sales to international dairy markets.
A decline in operating profit on rising operating costs does not bode well. In the fiscal second quarter, Neogen’s sales and marketing expenses rose 71.5%, whereas administrative expenses rose 240.6% from the prior-year quarter. Research & development expenses were up 58% from the year-ago quarter. Operating costs rose 149.8% year over year.
The company reported an operating loss of $7.7 million for the quarter under review compared with $12.5 million of operating profit in the year-ago period.
The ongoing supply chain disruptions and inflationary pressure continue to pose challenges for the company.
Shares of Neogen have underperformed the industryover the past year. The stock has declined 48% compared with the industry’s 40.2% fall.
Key Picks
A few better-ranked stocks in the overall healthcare sector include Haemonetics Corporation (HAE - Free Report) , TerrAscend Corp. and Akerna Corp. . Haemonetics and TerrAscend both sport a Zacks Rank #1 (Strong Buy) while Akerna carries a Zack Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Haemonetics’ stock has risen 42.1% in the past year. Earnings estimates for Haemonetics have increased from $2.87 per share to $2.91 for 2023 and from $3.02 per share to $3.28 for 2024 in the past 30 days.
HAE’s earnings beat estimates in each of the last four quarters, delivering an average surprise of 10.98%. In the last reported quarter, it delivered an earnings surprise of 7.59%.
Estimates for TerrAscend in 2023 have remained constant at a loss of 10 cents per share in the past 30 days. Shares of TerrAscend have declined 70.6% in the past year.
TerrAscend’s earnings beat estimates in one of the last three quarters and missed the mark in the other two, with the average negative surprise being 136.11%. In the last reported quarter, TRSSF delivered an earnings surprise of 216.67%.
Akerna’s stock has declined 95.7% in the past year. Estimates for 2023 have remained constant at a loss of $1.91 per share over the past 30 days.
Akerna missed earnings estimates in each of the last four quarters, delivering a negative earnings surprise of 15.49% on average. In the last reported quarter, KERN delivered a negative earnings surprise of 13.33%.
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Neogen's (NEOG) New Launches Aid, Margin Pressure Stays
Neogen (NEOG - Free Report) is well positioned to gain from its extensive global foothold and diverse product mix. The company’s long-term growth strategy looks impressive. Global macroeconomic issues continue to put pressure on Neogen's vast international operation. The stock carries a Zacks Rank #3 (Hold).
Neogen exited the second quarter of fiscal 2023, with better-than-expected earnings and revenues. The company recorded sales growth across the Food Safety and Animal Safety segments.
Animal Safety revenues in the fiscal second quarter were up 8.4% year over year, consisting of 6.9% core growth, 2.4% from acquisitions and a foreign currency headwind of 0.9%. The core growth was led by the company’s portfolio of biosecurity products, driven largely by share gains in the animal protein market, sales of dairy hygiene products and new insect control products. The company’s line of parasiticides, acquired in September 2021, and veterinary instruments both reported an increase in market share gains.
Neogen continues to see rising revenues from the Food Safety business. For second-quarter fiscal 2023, Food Safety revenues improved 140.3% year over year, consisting of 6.3% core growth and 140.5% from acquisitions.
The core growth was led by the Culture Media & Other category, where the Company’s Petrifilm product line performed well, as did Neogen Analytics services. Customer demand increased significantly for the company’s software as a service that combines food safety analytics, data aggregation and digital services on a single platform. Within the Bacterial & General Sanitation category, the company’s AccuPoint general sanitation product line saw solid core growth, while in Natural Toxins, Allergens & Drug Residues, sales of aflatoxin test kits were up significantly from increased demand related to domestic and international grain harvests.
Of late, Neogen has inked a series of partnership deals, which are expected to aid in the company’s segmental growth as well as international expansion.
Neogen Corporation Price
Neogen Corporation price | Neogen Corporation Quote
In 2022, Neogen completed its merger with 3M to combine the latter’s Food Safety Business with its existing operations. In 2021, Neogen extended its strategic partnership with Gencove, Inc. Through this multi-year global agreement, Neogen can offer its SkimSeek low-pass sequencing technology to customers across the agricultural community.
On the flip side, during the fiscal second quarter, Neogen registered lower sales of rapid microbial testing products. Moreover, Allergen test kits were roughly flat due to softening market conditions and supply disruptions for certain products, while drug residue test kits were down primarily due to lower sales to international dairy markets.
A decline in operating profit on rising operating costs does not bode well. In the fiscal second quarter, Neogen’s sales and marketing expenses rose 71.5%, whereas administrative expenses rose 240.6% from the prior-year quarter. Research & development expenses were up 58% from the year-ago quarter. Operating costs rose 149.8% year over year.
The company reported an operating loss of $7.7 million for the quarter under review compared with $12.5 million of operating profit in the year-ago period.
The ongoing supply chain disruptions and inflationary pressure continue to pose challenges for the company.
Shares of Neogen have underperformed the industryover the past year. The stock has declined 48% compared with the industry’s 40.2% fall.
Key Picks
A few better-ranked stocks in the overall healthcare sector include Haemonetics Corporation (HAE - Free Report) , TerrAscend Corp. and Akerna Corp. . Haemonetics and TerrAscend both sport a Zacks Rank #1 (Strong Buy) while Akerna carries a Zack Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Haemonetics’ stock has risen 42.1% in the past year. Earnings estimates for Haemonetics have increased from $2.87 per share to $2.91 for 2023 and from $3.02 per share to $3.28 for 2024 in the past 30 days.
HAE’s earnings beat estimates in each of the last four quarters, delivering an average surprise of 10.98%. In the last reported quarter, it delivered an earnings surprise of 7.59%.
Estimates for TerrAscend in 2023 have remained constant at a loss of 10 cents per share in the past 30 days. Shares of TerrAscend have declined 70.6% in the past year.
TerrAscend’s earnings beat estimates in one of the last three quarters and missed the mark in the other two, with the average negative surprise being 136.11%. In the last reported quarter, TRSSF delivered an earnings surprise of 216.67%.
Akerna’s stock has declined 95.7% in the past year. Estimates for 2023 have remained constant at a loss of $1.91 per share over the past 30 days.
Akerna missed earnings estimates in each of the last four quarters, delivering a negative earnings surprise of 15.49% on average. In the last reported quarter, KERN delivered a negative earnings surprise of 13.33%.