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Competitive Pressure, Macroeconomic Woes Weigh on NEOG Stock
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Neogen's (NEOG - Free Report) vast international trade is being impacted by global macroeconomic issues. A tough competitive landscape also weighs on the stock. NEOG stock currently carries a Zacks Rank #4 (Sell).
Factors Pulling NEOG Stock Down
The current macroeconomic environment has affected Neogen’s financial operations. Governments and insurance companies continue to look for ways to contain the rising cost of healthcare. This puts pressure on players in the healthcare industry, with Neogen being no exception. Although the company is gradually coming out of the impact of the two-and-a-half-year-long healthcare crisis, deteriorating international trade, with global inflationary pressure leading to a tough situation related to raw material and labor cost as well as freight charges and high interest rate, have put the medical device space in a tight spot.
Given sustained macroeconomic pressure, the company may struggle to keep its cost of revenues and operating expenses in check. In the fiscal first quarter of 2025, administrative expenses increased 14.5% from the prior-year quarter’s level to $51.7 million. Also, operating costs rose 5.2% year over year to $102.7 million. Our model forecasts a 0.5% rise in the metric for fiscal 2025.
Neogen’s international business continues to be affected due to currency movements. During the fiscal first quarter, the company faced a foreign currency headwind of 390 basis points.
Further, Neogen faces intense competition from companies ranging from small businesses to divisions of large multinational companies. Some of these organizations have substantially greater financial resources than the company. Also, it faces intense competition resulting from the development of new technologies by the company’s competitors, which could affect the marketability and profitability of Neogen’s products.
Over the past three months, shares of NEOG have declined 9.6% against the industry’s 6.8% growth. With worldwide geopolitical issues getting complicated day by day, the company may continue to face supply-related issues. Further, labor shortages and rising healthcare costs along with inflationary pressure might continue to dent Neogen’s profit margins. Accordingly, the stock might take time to regain its lost momentum.
Favorable Aspects for NEOG
On a positive note, Neogen is progressing well in terms of picking the right growth markets and gaining a bigger share of those markets. In the fiscal first quarter, the Indicator Testing, Culture Media & Other product category benefited from strong growth in the Petrifilm product line as well as solid growth in culture media and food quality nutritional analysis. Additionally, the Bacterial and General Sanitation product category saw modest growth in Pathogens. Also, the Natural Toxins and Allergens category experienced modest growth in Allergens but experienced a decline in Natural Toxins.
The company is expanding well in other geographies. The company is seeing double-digit sales growth in Latin America, with strong performance across most key product categories.
In terms of product launches, in fiscal 2024, Neogen made a few significant launches, which include the new Molecular Detection Assay 2 — Salmonella Enteritidis/Salmonella Typhimurium (MDA2SEST) and CelluSmart technology (from Megazyme by Neogen). Additionally, the company launched the Petrifilm Automated Feeder to help labs efficiently process microbial tests and meet food safety standards. In April 2024, the company launched Neogen Farm Fluid MAX (in Great Britain) — a dual-action disinfectant designed for challenging farm conditions.
Boston Scientific’s shares have surged 58.3% in the past year. Estimates for the company’s earnings per share (EPS) have jumped 2.5% to $2.46 for 2024 and 0.4% to $2.72 for 2025 in the past 30 days. BSX’s earnings surpassed estimates in each of the trailing four quarters, delivering an average beat of 8.3%. In the last reported quarter, it posted an earnings surprise of 8.6%.
Estimates for Haemonetics’ fiscal 2025 earnings per share have jumped 0.4% to $4.59 in the past 30 days. Shares of the company have increased 4.5% in the past year compared with the industry’s growth of 26.5%. HAE’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 2.82%. In the last reported quarter, it delivered an earnings surprise of 2.75%.
Estimates for ResMed’s fiscal 2025 EPS have risen 2.2% to $9.22 in the past 30 days. Shares of the company have surged 58.8% in the past year compared with the industry’s 29.2% growth. RMD’s earnings surpassed estimates in each of the trailing four quarters, with the average beat being 6.4%. In the last reported quarter, it delivered an earnings surprise of 8.4%.
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Competitive Pressure, Macroeconomic Woes Weigh on NEOG Stock
Neogen's (NEOG - Free Report) vast international trade is being impacted by global macroeconomic issues. A tough competitive landscape also weighs on the stock. NEOG stock currently carries a Zacks Rank #4 (Sell).
Factors Pulling NEOG Stock Down
The current macroeconomic environment has affected Neogen’s financial operations. Governments and insurance companies continue to look for ways to contain the rising cost of healthcare. This puts pressure on players in the healthcare industry, with Neogen being no exception. Although the company is gradually coming out of the impact of the two-and-a-half-year-long healthcare crisis, deteriorating international trade, with global inflationary pressure leading to a tough situation related to raw material and labor cost as well as freight charges and high interest rate, have put the medical device space in a tight spot.
Given sustained macroeconomic pressure, the company may struggle to keep its cost of revenues and operating expenses in check. In the fiscal first quarter of 2025, administrative expenses increased 14.5% from the prior-year quarter’s level to $51.7 million. Also, operating costs rose 5.2% year over year to $102.7 million. Our model forecasts a 0.5% rise in the metric for fiscal 2025.
Neogen’s international business continues to be affected due to currency movements. During the fiscal first quarter, the company faced a foreign currency headwind of 390 basis points.
Further, Neogen faces intense competition from companies ranging from small businesses to divisions of large multinational companies. Some of these organizations have substantially greater financial resources than the company. Also, it faces intense competition resulting from the development of new technologies by the company’s competitors, which could affect the marketability and profitability of Neogen’s products.
Neogen Corporation Price
Neogen Corporation price | Neogen Corporation Quote
Over the past three months, shares of NEOG have declined 9.6% against the industry’s 6.8% growth. With worldwide geopolitical issues getting complicated day by day, the company may continue to face supply-related issues. Further, labor shortages and rising healthcare costs along with inflationary pressure might continue to dent Neogen’s profit margins. Accordingly, the stock might take time to regain its lost momentum.
Favorable Aspects for NEOG
On a positive note, Neogen is progressing well in terms of picking the right growth markets and gaining a bigger share of those markets. In the fiscal first quarter, the Indicator Testing, Culture Media & Other product category benefited from strong growth in the Petrifilm product line as well as solid growth in culture media and food quality nutritional analysis. Additionally, the Bacterial and General Sanitation product category saw modest growth in Pathogens. Also, the Natural Toxins and Allergens category experienced modest growth in Allergens but experienced a decline in Natural Toxins.
The company is expanding well in other geographies. The company is seeing double-digit sales growth in Latin America, with strong performance across most key product categories.
In terms of product launches, in fiscal 2024, Neogen made a few significant launches, which include the new Molecular Detection Assay 2 — Salmonella Enteritidis/Salmonella Typhimurium (MDA2SEST) and CelluSmart technology (from Megazyme by Neogen). Additionally, the company launched the Petrifilm Automated Feeder to help labs efficiently process microbial tests and meet food safety standards. In April 2024, the company launched Neogen Farm Fluid MAX (in Great Britain) — a dual-action disinfectant designed for challenging farm conditions.
Key Picks
Some better-ranked stocks in the broader medical space are Boston Scientific (BSX - Free Report) , Haemonetics (HAE - Free Report) and ResMed (RMD - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Boston Scientific’s shares have surged 58.3% in the past year. Estimates for the company’s earnings per share (EPS) have jumped 2.5% to $2.46 for 2024 and 0.4% to $2.72 for 2025 in the past 30 days. BSX’s earnings surpassed estimates in each of the trailing four quarters, delivering an average beat of 8.3%. In the last reported quarter, it posted an earnings surprise of 8.6%.
Estimates for Haemonetics’ fiscal 2025 earnings per share have jumped 0.4% to $4.59 in the past 30 days. Shares of the company have increased 4.5% in the past year compared with the industry’s growth of 26.5%. HAE’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 2.82%. In the last reported quarter, it delivered an earnings surprise of 2.75%.
Estimates for ResMed’s fiscal 2025 EPS have risen 2.2% to $9.22 in the past 30 days. Shares of the company have surged 58.8% in the past year compared with the industry’s 29.2% growth. RMD’s earnings surpassed estimates in each of the trailing four quarters, with the average beat being 6.4%. In the last reported quarter, it delivered an earnings surprise of 8.4%.