1-Star Price
PREMIUM
5-Star Price
PREMIUM
Economic Moat
PREMIUM
Capital Allocation
PREMIUM
Narrow-moat Neogen reported fiscal third-quarter earnings that were negatively affected by one-time merger costs and inflationary headwinds; we believe the market’s negative reaction (with shares down over 8%) is somewhat shortsighted, and we maintain our $26 fair value estimate. However, even after the stock’s precipitous decline, Neogen shares still look moderately overvalued in our view.
Neogen Corporation, headquartered in Lansing, Michigan, develops, manufactures, and markets various products for food and animal safety. In food safety (70% of post-merger sales), Neogen performs diagnostics to detect unintended substances in food and animal feed, such as pathogens, allergens, and drug residues, for global food and feed processing companies. In animal safety (20% of post-merger sales), Neogen sells veterinary instruments, pharmaceuticals, disinfectants, and genomics tests for animals, including cattle, horses, and canines. Sales in the United States account for 60% of total revenue, while international markets, including Canada, Europe, Asia, and Latin America, account for the remaining 40%.
