Neogen Corporation (NEOG - Free Report) has been gaining investor confidence on solid business in international markets.
In the past three months, shares of this Zacks Rank #3 (Hold) company have rallied 11.2% versus the industry’s 7.4% rise.
What’s Favoring the Stock?
Food Safety Business Progresses: Neogen continues to see rising revenues from the Food Safety business owing to a growing population and awareness about higher-quality food among the middle class. Sales of foodborne pathogen detection tests like Listeria and Salmonella are also on the rise.
International Growth Continues: Neogen’s Europe business, which has three divisions, is performing well. Last quarter, the company’s Quat-Chem disinfectant division initiated production of its new Neogen Viroxide and the first shipment was sent to Germany, Egypt and the Czech Republic.Sales from Neogen in Brazil increased 40% year over year. The company is also upbeat about the prospects in China and India.
Genomic Business Grows: Neogen’s worldwide animal genomics business unit recorded solid revenue increase in the fiscal third quarter.
Genomic revenues within the Food Safety business registered double-digit increase over the prior year on growth of laboratories in Scotland and Brazil. The business expanded well over the last few years as the company continued to add laboratory capabilities in Scotland to serve the growing European market and purchased Deoxi lab, a genomic laboratory, in Brazil.
What’s Bothering It?
There are a few factors that have been marring the stock’s prospects.
Tough Competitive Landscape: Neogen faces intense competition from from small businesses to divisions of large multinational companies. Some of these organizations have substantially greater financial resources than the company. The development of new technologies by competitors can affect the marketability and profitability of Neogen’s products.
Global Economic Problems Dent Growth: The global macroeconomic environment has affected Neogen’s operations. Governments and insurance companies continue to look for ways to contain the rising cost of healthcare. This might build pressure on Neogen.
Which Way Are Estimates Moving?
For the fourth quarter of fiscal 2019, the Zacks Consensus Estimate for earnings is pegged at 28 cents, indicating 15.2% fall from the year-ago quarter. The consensus mark for revenues stands at $110.9 million, implying a 1.5% improvement from the year-earlier quarter.
A few better-ranked stocks in the broader medical space are Teleflex Inc. (TFX - Free Report) , Penumbra (PEN - Free Report) and NuVasive Corporation (NUVA - Free Report) . While Teleflex currently carries a Zacks Rank #2 (Buy), the other two have a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Teleflex’s long-term earnings growth rate is expected at 13.7%.
Penumbra’s long-term earnings growth rate is projected at 21.5%.
NuVasive’s long-term earnings growth rate is expected to be 11.9%.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>