During its earnings presentation on April 9, Neogen (NEOG, Financial) outlined the anticipated effects of current tariffs on its financial results. Initially, the company predicted an approximate annualized decrease in adjusted EBITDA of $29 million due to tariffs. However, by May 14, Neogen revised this estimate, projecting a reduced annualized negative impact of around $5 million. This adjustment reflects several strategic responses the company has undertaken, such as implementing surcharges, leveraging tariff exemptions where possible, cutting down on existing inventory, redirecting supply chains, and sourcing alternative resources. Details of these developments were disclosed in a regulatory filing accompanied by presentation slides.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 3 analysts, the average target price for Neogen Corp (NEOG, Financial) is $8.50 with a high estimate of $13.00 and a low estimate of $5.00. The average target implies an upside of 37.21% from the current price of $6.20. More detailed estimate data can be found on the Neogen Corp (NEOG) Forecast page.
Based on the consensus recommendation from 4 brokerage firms, Neogen Corp's (NEOG, Financial) average brokerage recommendation is currently 2.0, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Neogen Corp (NEOG, Financial) in one year is $15.61, suggesting a upside of 151.98% from the current price of $6.195. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Neogen Corp (NEOG) Summary page.
NEOG Key Business Developments
Release Date: April 09, 2025
- Revenue: $221 million for the third quarter.
- Core Revenue Growth: 20 basis points, excluding foreign currency, acquisitions, and discontinued product lines.
- Foreign Currency Impact: Headwind of 310 basis points compared to the prior year.
- Food Safety Segment Revenue: $153 million, down 3.2% year-over-year.
- Animal Safety Segment Revenue: $68 million, with a core revenue decline of 2.6% year-over-year.
- Gross Margin: 49.9%, a decrease of 120 basis points from the previous year.
- Adjusted EBITDA: $49 million, representing a margin of 22%.
- Adjusted Net Income: $21 million.
- Adjusted Earnings Per Share: $0.10.
- Free Cash Flow: Outflow of approximately $14 million for the quarter.
- Debt: Gross debt of $900 million, with 61% at a fixed rate.
- Cash Position: $128 million.
- Full Year Revenue Outlook: Approximately $895 million.
- Full Year Adjusted EBITDA Outlook: Approximately $195 million.
- Capital Expenditures: Expected to be approximately $100 million for the year.
- Full Year Free Cash Flow Outlook: An outflow of approximately $20 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Neogen Corp (NEOG, Financial) achieved a 7% core revenue growth in its Food Safety segment, indicating a solid underlying business despite market challenges.
- The company successfully completed the refinancing of its Term Loan A, extending the maturity by close to three years and realizing 60 basis points of interest rate savings.
- Neogen Corp (NEOG) has made significant progress in the integration of its transformational acquisition, with sample collection recovering to prior production levels.
- The company is focusing on its differentiated bovine genomics product offering, which has shown growth despite challenges in other areas of the genomics business.
- Neogen Corp (NEOG) is taking actions to accelerate the building of a more profitable and focused business, with potential portfolio actions expected to be accretive to margins and prioritized for debt repayment.
Negative Points
- Neogen Corp (NEOG) faced a challenging macroeconomic environment, with uncertainty in global trade and potential recession concerns impacting customer confidence and inventory commitments.
- The company's third-quarter results were below expectations, with core revenue growth of only 20 basis points and a foreign currency headwind of 310 basis points.
- The Animal Safety segment experienced a core revenue decline of 2.6%, with notable softness in China due to macroeconomic uncertainty.
- Neogen Corp (NEOG) is dealing with challenges in its genomics business, which has been a headwind for the past seven quarters, resulting in a mid-single-digit decline in core revenue.
- The company is updating its full-year revenue outlook to approximately $895 million, reflecting a softer market backdrop and the uncertain impact of tariffs.
