Neogen Stock Soars 28% on Strong Earnings, Raised Outlook
The food and animal safety specialist signals a return to growth, with revenue and profit beating analyst estimates, suggesting its major acquisition is paying off.
Shares of Neogen Corporation (NEOG) surged more than 28% in active trading after the company posted second-quarter financial results that significantly outpaced analyst expectations and raised its full-year revenue forecast, signaling a potential turnaround for the food and animal safety firm.
The Lansing, Michigan-based company saw its stock jump $2.09 to close at $9.47, boosting its market capitalization to over $1.6 billion. The rally came after Neogen reported an adjusted earnings per share of $0.10, comfortably beating the consensus estimate of $0.07. Revenue for the quarter landed at $224.7 million, surpassing Wall Street’s projection of approximately $209 million.
Driving the investor enthusiasm was the company’s optimistic outlook for the remainder of the fiscal year. Neogen management raised its full-year revenue guidance to a range of $845 million to $855 million. This upward revision suggests that the company is emerging from a challenging period and seeing a return to core growth, a key focus for investors following its transformative acquisition of 3M’s Food Safety Division in 2022.
The integration of the 3M business has been a complex and closely watched process. For several quarters, the associated costs and operational adjustments have weighed on Neogen’s margins and stock performance. Thursday’s strong results and positive forecast are the clearest indicators yet that the strategic combination is beginning to stabilize and contribute positively to the company's top and bottom lines.
Neogen, a critical player in the global food supply chain, provides a wide array of diagnostic test kits and related products to detect dangerous pathogens, toxins, and allergens in food and animal feed. The company also has a significant animal health segment, offering pharmaceuticals, instruments, and supplements for the veterinary and livestock markets.
The market’s strong reaction underscores a renewed confidence in Neogen’s strategy. The share price of $9.47 now trades significantly above the average analyst price target of $8.17 that was in place before the earnings announcement, indicating the results caught many on Wall Street by surprise. Investors are now recalibrating their expectations in light of the renewed momentum.
While the company did not provide specific commentary in the initial reports, the decision to raise guidance speaks volumes about management's confidence. The performance suggests improving operational efficiency and a healthier demand environment for its food safety and animal health products. The strong quarterly performance will likely lead to a series of estimate revisions from brokerage analysts in the coming days.
Looking ahead, investors will be watching to see if Neogen can maintain this momentum. Key areas of focus will be the continued successful integration of its acquired assets, sustained revenue growth in its core segments, and a consistent improvement in profitability and operating margins as post-acquisition synergies are realized. Thursday’s report marks a significant step in rebuilding investor trust and sets a new, higher bar for performance in the quarters to come.