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Here's Why You Should Invest in Neogen (NEOG) Stock Now
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Neogen Corporation (NEOG - Free Report) is well poised to gain in the coming quarters, led by strong performance across its Animal Safety and Food Safety segments. It focuses on product launches to strengthen its business on a global scale. However, escalating costs and stiff competition are a concern.
In the past year, the Zacks Rank #2 (Buy) stock has lost 10.5% compared with a 20.5% fall of the industry and a 18.4% increase of the S&P 500.
The renowned food and animal safety products provider has a market capitalization of $4.70 billion. The company’s fiscal third-quarter earnings surpassed the Zacks Consensus Estimate by a remarkable 200%.
Let’s delve deeper.
Factors At Play
Animal Safety Business Grows Well: Animal Safety revenues in the fiscal third quarter were up 1.9% year over year, consisting of 2.2% core growth. The core growth was led by the company’s portfolio of biosecurity products, driven largely by insect control share gains in the animal protein market.
The company’s genomics business also performed well, with global core growth of 7.7%, led by volume increases in the global beef markets, partially offset by declines in testing in China caused by the continuation of COVID-related lab closures.
Per management, the acquisitions of GVS and CAPInnoVet are part of Neogen’s strategy to expand companion animal offerings. The company’s acquisition of Delf UK Limited is expected to bolster its performance dairy chemicals offerings. Delf’s industrial cleaning products complement Neogen’s Quat-Chem disinfectant and cleaner offerings, enhancing its biosecurity portfolio.
Food Safety Sales Growth Continues: Neogen continues to see rising revenues from the Food Safety business. For third-quarter fiscal 2023, Food Safety revenues surged 141.5% year over year, consisting of 5.8% core growth and 139.1% from acquisitions.
Image Source: Zacks Investment Research
The core growth was led by the Culture Media & Other category, which benefited from a large order from a vaccine manufacturer. In the Bacterial & General Sanitation product category, a solid increase in sales of Soleris spoilage detection products contributed to the growth.
Product Launches: Neogen, of late, has been focusing on product launches to strengthen its business on a global scale.
In March 2023, Neogen announced that the U.S. Environmental Protection Agency (EPA) has approved additional virucide claims to its Neogen Viroxide Super disinfectant. These label claims specify that Neogen Viroxide Super kills viruses on hard non-porous surfaces that cause Avian Influenza A, Bovine Viral Diarrhea, Porcine Respiratory and Reproductive Syndrome (PRRS), and African Swine Fever.
In November 2022, Neogen introduced an upgraded version of its best-selling Ideal D3 detectable needles, designed to be six times more detectable than the conventional and stainless-steel needles.
Downsides
Mounting Operating Expenses: In the fiscal third quarter, Negen’s sales and marketing expenses rose 79.7%, whereas administrative expenses rose 85.7% from the prior-year quarter’s levels. Research & development expenses were up 59.1% year over year. Operating costs increased 80.8% from the last year’s quarter.
Competitive Landscape Tough: Neogen faces intense competition from small businesses to divisions of large multinational companies. Some of these organizations have greater financial resources. NEOG faced intense competition from the development of new technologies by the company’s competitor, which could affect the marketability and profitability of Neogen’s products.
Estimate Trend
In the past 90 days, the Zacks Consensus Estimate for Neogen’s earnings for 2023 has moved 11.1% north to 50 cents.
The Zacks Consensus Estimate for 2023 revenues is pegged at $807.9 million, suggesting a 53.3% rise from the 2022 reported number.
Other Key Picks
A few top-ranked stocks in the broader medical space are Hologic, Inc. (HOLX - Free Report) , Health Equity, Inc. (HQY - Free Report) and Boston Scientific Corporation (BSX - Free Report) .
Hologic, carrying a Zacks Rank #2 at present, has an estimated growth rate of 5.1% for fiscal 2024. HOLX’s earnings surpassed estimates in all the trailing four quarters, the average being 27.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Hologic has gained 15.4% compared with the industry’s 12.5% rise in the past year.
HealthEquity, sporting a Zacks Rank #1 at present, has an estimated long-term growth rate of 22%. HQY’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 9.1%.
HealthEquity has gained 9.5% against the industry’s 13.1% decline over the past year.
Boston Scientific, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 11.5%. BSX’s earnings surpassed estimates in two of the trailing four quarters and missed in the other two, the average surprise being 1.9%.
Boston Scientific has gained 42.3% against the industry’s 20.5% decline in the past year.
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Here's Why You Should Invest in Neogen (NEOG) Stock Now
Neogen Corporation (NEOG - Free Report) is well poised to gain in the coming quarters, led by strong performance across its Animal Safety and Food Safety segments. It focuses on product launches to strengthen its business on a global scale. However, escalating costs and stiff competition are a concern.
In the past year, the Zacks Rank #2 (Buy) stock has lost 10.5% compared with a 20.5% fall of the industry and a 18.4% increase of the S&P 500.
The renowned food and animal safety products provider has a market capitalization of $4.70 billion. The company’s fiscal third-quarter earnings surpassed the Zacks Consensus Estimate by a remarkable 200%.
Let’s delve deeper.
Factors At Play
Animal Safety Business Grows Well: Animal Safety revenues in the fiscal third quarter were up 1.9% year over year, consisting of 2.2% core growth. The core growth was led by the company’s portfolio of biosecurity products, driven largely by insect control share gains in the animal protein market.
The company’s genomics business also performed well, with global core growth of 7.7%, led by volume increases in the global beef markets, partially offset by declines in testing in China caused by the continuation of COVID-related lab closures.
Per management, the acquisitions of GVS and CAPInnoVet are part of Neogen’s strategy to expand companion animal offerings. The company’s acquisition of Delf UK Limited is expected to bolster its performance dairy chemicals offerings. Delf’s industrial cleaning products complement Neogen’s Quat-Chem disinfectant and cleaner offerings, enhancing its biosecurity portfolio.
Food Safety Sales Growth Continues: Neogen continues to see rising revenues from the Food Safety business. For third-quarter fiscal 2023, Food Safety revenues surged 141.5% year over year, consisting of 5.8% core growth and 139.1% from acquisitions.
The core growth was led by the Culture Media & Other category, which benefited from a large order from a vaccine manufacturer. In the Bacterial & General Sanitation product category, a solid increase in sales of Soleris spoilage detection products contributed to the growth.
Product Launches: Neogen, of late, has been focusing on product launches to strengthen its business on a global scale.
In March 2023, Neogen announced that the U.S. Environmental Protection Agency (EPA) has approved additional virucide claims to its Neogen Viroxide Super disinfectant. These label claims specify that Neogen Viroxide Super kills viruses on hard non-porous surfaces that cause Avian Influenza A, Bovine Viral Diarrhea, Porcine Respiratory and Reproductive Syndrome (PRRS), and African Swine Fever.
In November 2022, Neogen introduced an upgraded version of its best-selling Ideal D3 detectable needles, designed to be six times more detectable than the conventional and stainless-steel needles.
Downsides
Mounting Operating Expenses: In the fiscal third quarter, Negen’s sales and marketing expenses rose 79.7%, whereas administrative expenses rose 85.7% from the prior-year quarter’s levels. Research & development expenses were up 59.1% year over year. Operating costs increased 80.8% from the last year’s quarter.
Competitive Landscape Tough: Neogen faces intense competition from small businesses to divisions of large multinational companies. Some of these organizations have greater financial resources. NEOG faced intense competition from the development of new technologies by the company’s competitor, which could affect the marketability and profitability of Neogen’s products.
Estimate Trend
In the past 90 days, the Zacks Consensus Estimate for Neogen’s earnings for 2023 has moved 11.1% north to 50 cents.
The Zacks Consensus Estimate for 2023 revenues is pegged at $807.9 million, suggesting a 53.3% rise from the 2022 reported number.
Other Key Picks
A few top-ranked stocks in the broader medical space are Hologic, Inc. (HOLX - Free Report) , Health Equity, Inc. (HQY - Free Report) and Boston Scientific Corporation (BSX - Free Report) .
Hologic, carrying a Zacks Rank #2 at present, has an estimated growth rate of 5.1% for fiscal 2024. HOLX’s earnings surpassed estimates in all the trailing four quarters, the average being 27.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Hologic has gained 15.4% compared with the industry’s 12.5% rise in the past year.
HealthEquity, sporting a Zacks Rank #1 at present, has an estimated long-term growth rate of 22%. HQY’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 9.1%.
HealthEquity has gained 9.5% against the industry’s 13.1% decline over the past year.
Boston Scientific, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 11.5%. BSX’s earnings surpassed estimates in two of the trailing four quarters and missed in the other two, the average surprise being 1.9%.
Boston Scientific has gained 42.3% against the industry’s 20.5% decline in the past year.