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1. Company Snapshot

1.a. Company Description

Neogen Corporation, together with its subsidiaries, develops, manufactures, and markets various products for food and animal safety worldwide.It operates through two segments, Food Safety and Animal Safety.The Food Safety segment offers diagnostic test kits and related products to detect dangerous and unintended substances in food and animal feed, including foodborne pathogens, spoilage organisms, natural toxins, food allergens, genetic modifications, ruminant by-products, meat speciation, drug residues, pesticide residues, and general sanitation concerns; and AccuPoint Advanced rapid sanitation test to detect the presence of adenosine triphosphate, a chemical found in living cells.


This segment offers its products primarily to food and feed producers and processors; grain producers and processors; producers of cookies, crackers, candy, ice cream, and other processed foods; meat and poultry processors, seafood processors, fruit and vegetable producers, and dairies; laboratories; and producers of pharmaceuticals, cosmetics, and veterinary vaccines.The Animal Safety segment provides veterinary instruments, pharmaceuticals, vaccines, topicals, parasiticides, diagnostic products, rodenticides, cleaners, disinfectants, insecticides, and genomics testing services for the animal safety market.This segment offers various products for researchers to detect biologically active substances.


Its drug detection immunoassay test kits are used for the detection of abused and therapeutic drugs in farm and racing animals; detection of drug residues in meat and meat products; and human forensic toxicology drug screening applications.In addition, this segment's products are used to maintain sanitary conditions and limit the potential hazards of bacteria, fungi, and viruses.Neogen Corporation was incorporated in 1981 and is headquartered in Lansing, Michigan.

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1.b. Last Insights on NEOG

Neogen Corporation's recent performance is driven by several positive factors. The company's asset sale and goodwill write-off position it for a turnaround, with debt reduction and potential future asset sales improving profitability. Additionally, AE Wealth Management LLC increased its stake in Neogen by 94.2%, owning 22,180 shares. Bank of Montreal Can also raised its stake by 171.2%. Despite a Q1 earnings miss, revenues of $209.2 million beat consensus. Analysts see a 29.89% upside potential, with an upward trend in earnings estimate revisions indicating a potential near-term increase.

1.c. Company Highlights

2. Neogen's Q1 FY 2026 Earnings: A Step Towards Recovery

Neogen Corporation reported revenue of $209 million, up 0.3% year over year on a core basis, in line with expectations. The company's adjusted EBITDA margin was impacted by lower revenue, higher tariff costs, and higher operating expenses. EPS came in at $0.05, missing estimates of $0.08. The company's gross debt stood at $800 million, with a total cash position of $139 million, resulting in a net debt to EBITDA ratio of 0.14.

Publication Date: Oct -09

📋 Highlights
  • Revenue Growth:: Neogen reported $209 million revenue, up 0.3% YoY on a core basis, meeting expectations.
  • EBITDA Margin Target:: Adjusted EBITDA margins are projected to exceed 20% by fiscal year-end, driven by $20 million annualized cost savings from headcount reductions.
  • Animal Safety Segment Growth:: Core revenue in Animal Safety rose 5.8%, fueled by animal care and life sciences product lines.
  • Free Cash Flow Improvement:: Q1 free cash flow outflow of $13 million marked a $43 million improvement YoY, despite $6 million in sample handling costs.
  • Portfolio Optimization:: Divested Cleaners and Disinfectants, with potential genomics sale, to focus on high-margin food safety and animal safety segments.

Segment Performance

The Animal Safety segment drove growth with a 5.8% core revenue increase, fueled by animal care and life sciences product categories. In contrast, the food safety segment experienced a mid-single-digit decline in PetriFilm revenue due to temporary distributor inventory changes. Despite this, key product lines like food quality and pathogens showed solid growth.

Operational Improvements

To drive growth, Neogen is focusing on top-line growth, right-sizing its cost base, reinvigorating innovation, and deleveraging. A 10% global headcount reduction was implemented to reduce operating expenses by $20 million on an annualized basis. The company expects to see benefits from these actions in the second half of the fiscal year, with EBITDA margin expected to progress towards a target of over 20%.

Valuation and Outlook

With a P/S Ratio of 1.66 and an EV/EBITDA ratio of -1.32, the market appears to have priced in some of Neogen's challenges. However, the company's efforts to improve operational efficiency, drive innovation, and prioritize high-margin product lines could potentially lead to improved profitability. Analysts estimate next year's revenue growth at -8.5%, indicating a challenging near-term outlook.

Strategic Initiatives

Neogen's new CEO, Mike Nassif, has identified areas for improvement, including a broad portfolio and execution challenges. The company is prioritizing high-margin, high-growth product lines and aiming to sharpen its commercial focus, manage costs, and improve cash flow. The company plans to reinvigorate innovation by focusing on externally informed strategies to drive substantial market-shaping innovations.

3. NewsRoom

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Geode Capital Management LLC Increases Holdings in Neogen Corporation $NEOG

Nov -29

Source: defenseworld.net

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AE Wealth Management LLC Purchases 10,761 Shares of Neogen Corporation $NEOG

Nov -19

Source: defenseworld.net

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Bank of Montreal Can Has $528,000 Stock Holdings in Neogen Corporation $NEOG

Nov -18

Source: defenseworld.net

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Kuehn Law Encourages Investors of Neogen Corporation to Contact Law Firm

Nov -10

Source: globenewswire.com

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Wall Street Analysts See a 29.89% Upside in Neogen (NEOG): Can the Stock Really Move This High?

Nov -04

Source: zacks.com

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Neogen® Corporation Announces Appointment of Bryan Riggsbee as Chief Financial Officer

Oct -30

Source: businesswire.com

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Kuehn Law Encourages Investors of Neogen Corporation to Contact Law Firm

Oct -28

Source: prnewswire.com

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Mutual of America Capital Management LLC Decreases Stock Holdings in Neogen Corporation $NEOG

Oct -26

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.84%)

6. Segments

Food Safety

Expected Growth: 6.5%

Neogen's 6.5% growth in Food Safety is driven by increasing global demand for food testing, stringent regulations, and rising consumer awareness of foodborne illnesses. The company's innovative testing solutions, expanded product offerings, and strategic acquisitions also contribute to its growth. Furthermore, the growing need for food safety in emerging markets and the increasing adoption of automation in food testing laboratories support Neogen's continued expansion.

Animal Safety

Expected Growth: 7.5%

Neogen's Animal Safety segment growth is driven by increasing demand for animal-derived food products, rising concerns over food safety, and growing regulatory requirements. The company's innovative testing solutions and expanding global presence also contribute to its 7.5% growth rate.

7. Detailed Products

Genomics Services

Neogen Corporation provides genomics services, including DNA sequencing, genotyping, and gene expression analysis, to help customers understand the genetic makeup of their animals, plants, and microorganisms.

Animal Care Products

Neogen offers a range of animal care products, including cleaners, disinfectants, and sanitizers, to help maintain a healthy environment for animals.

Food Safety Diagnostics

Neogen develops and manufactures diagnostic tests and instruments to detect foodborne pathogens, such as Salmonella and E. coli, in food and environmental samples.

Rodent Control Products

Neogen provides a range of rodent control products, including baits, traps, and monitoring systems, to help manage rodent infestations in agricultural, commercial, and residential settings.

Life Sciences Research Products

Neogen offers a range of life sciences research products, including antibodies, enzymes, and biochemicals, to support scientific research and discovery.

8. Neogen Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Neogen Corporation's products are moderately susceptible to substitution, as there are alternative products available in the market. However, the company's strong brand reputation and customer loyalty mitigate the threat of substitution.

Bargaining Power Of Customers

Neogen Corporation's customers have limited bargaining power due to the company's strong market position and diversified customer base. The company's products are also highly specialized, making it difficult for customers to switch to alternative suppliers.

Bargaining Power Of Suppliers

Neogen Corporation's suppliers have moderate bargaining power due to the company's dependence on a few key suppliers for certain raw materials. However, the company's strong relationships with its suppliers and its ability to negotiate favorable terms mitigate the bargaining power of suppliers.

Threat Of New Entrants

The threat of new entrants in the market is low due to the high barriers to entry, including significant capital requirements, regulatory hurdles, and the need for specialized expertise. Neogen Corporation's established market position and strong brand reputation also make it difficult for new entrants to gain traction.

Intensity Of Rivalry

The intensity of rivalry in the market is high due to the presence of several established players, including Neogen Corporation. The company faces intense competition in terms of product offerings, pricing, and marketing strategies, which requires it to continuously innovate and differentiate itself to maintain its market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 22.37%
Debt Cost 5.99%
Equity Weight 77.63%
Equity Cost 9.79%
WACC 8.94%
Leverage 28.82%

11. Quality Control: Neogen Corporation passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Growth: 4.7

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Momentum: 10.0

Volatility: 2.0

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A-Score: 3.4/10

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Growth: 6.0

Quality: 3.2

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Volatility: 4.7

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Quality: 7.4

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Value: 1.4

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Quality: 3.8

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A-Score: 3.3/10

Value: 3.0

Growth: 3.1

Quality: 5.7

Yield: 0.0

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Neogen

A-Score: 2.5/10

Value: 7.9

Growth: 1.3

Quality: 3.2

Yield: 0.0

Momentum: 0.5

Volatility: 2.3

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

5.98$

Current Price

5.98$

Potential

-0.00%

Expected Cash-Flows