It has been about a month since the last earnings report for Neogen (NEOG). Shares have lost about 14.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Neogen due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Neogen's Q2 Earnings Lag Estimates, Guidance Down

Neogen reported drab second-quarter fiscal 2024 earnings per share of 11 cents, down 26.7% year over year. The reported figure also missed the Zacks Consensus Estimate by 26.7%.

Revenues in the fiscal second quarter dropped 0.2% on a year-over-year basis to $229.6 million. Core revenues fell 0.9%. Acquisitions and discontinued product lines contributed 0.2% revenue growth, while foreign currency added 0.5%. The metric missed the Zacks Consensus Estimate by 2.1%.

Segments in Detail

Within segments, Neogen registered Food Safety revenues of $164.4 million in the fiscal second quarter, marking a 1.9% improvement from $161.3 million in the prior-year period, led by 0.7% core growth and 0.3% growth from acquisitions and discontinued product lines and a foreign currency benefit of 0.9%.

The core revenue growth in 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.

Revenues from Animal Safety were $65.2 million, down 5% year over year. The downside was caused by a core revenue decline of 4.7%, a 0.2% headwind from discontinued product lines and a negative foreign currency impact of 0.1%.

Within the segment, the company registered a decline in the domestic Genomics business, led primarily by the attrition of a customer as the company continues to shift its primary strategic focus toward genetic testing for larger production animals.

On a global basis, Neogen’s Genomics business witnessed a core revenue decline in the mid-single-digit range, with increased sales in international beef markets offset by customer attrition in the United States, a result of the aforementioned strategic shift in focus.

Margin Details

Neogen’s fiscal second-quarter gross profit increased 3.8% year over year to $116.8 million. The gross margin expanded 193 basis points (bps) to 50.9%. The upside was led by a favorable impact from the product mix.

Sales and marketing expenses rose 23.3% to $44.8 million, whereas administrative expenses fell 32.8% from the prior-year quarter to $51.7 million.