Neogen Corporation NEOG is well poised to gain in the coming quarters, backed by core growth in Food Safely and strong prospects in Animal Safety despite the near-term challenges of lower volumes and inventory levels in end markets. Weak solvency and stiff rivalry are a concern.

In the past three months, this Zacks Rank #3 (Hold) stock has gained 8.3% compared with 24.7% rise of the industry and a 17.8% increase of the S&P 500.

The renowned food and animal safety products provider has a market capitalization of $3.49 billion. The company has an estimated earnings growth rate of 38.2% for the fiscal 2025 compared with the industry’s 23%. In the trailing four quarters, NEOG delivered an average earnings surprise of 47.98%.

Let’s delve deeper.

Factors at Play

Animal Safety Has Strong Prospects: Neogen’s Animal Safety segment is gaining from strong performances of a complete line of consumable products marketed to veterinarians and animal health product distributors.
The Animal Safety business continues to grow, led by sales of vet instruments and disposables and a new line of business with a large retail customer. Within the biosecurity portfolio, Neogen continues to grow solidly in cleaners, disinfectants and rodenticides.

Food Safety Sales Growth Continues: The Neogen Food Safety segment is primarily engaged in the development, production and marketing of diagnostic test kits, culture media and related products used by food producers and processors to detect harmful natural toxins, foodborne bacteria, allergens and levels of general sanitation.

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Regarding the latest development, revenues in the Food Safety segment in the fiscal second quarter increased 1.9% from the prior year’s levels — including core growth of 0.7%. Core growth within the segment was led by the Bacterial & General Sanitation product category, which benefited from new business wins and increased distributor orders for the company’s pathogen detection products.

Product Launches: In the fiscal second quarter, the company launched its new ERP system and initiated the exit of its transition services agreements. The company has also launched the Veratox VIP assay for the detection of walnuts, the third assay in Neogen’s Veratox VIP line of enhanced quantitative ELISA products. In January 2024, the company launched the SureKill Gel Bait Pro Applicator, which allows users to easily target inconvenient and challenging areas while minimizing bait waste and innovating baiting protocols.

Earlier in August 2023, Neogen launched Igenity Enhanced Dairy, a new and progressive genomic data management tool. The same month, Neogen launched an extensive selection of new genetic tests through Paw Print Genetics and Canine HealthCheck solutions.