Neogen Corp (NEOG, Financial), a prominent player in the Medical Diagnostics & Research industry, has recently witnessed a significant uptick in its stock performance. Over the past week, the company's stock price has seen a gain of 4.15%, and an impressive 39.29% increase over the last three months. Currently, Neogen boasts a market capitalization of $3.98 billion. According to GuruFocus's valuation metrics, Neogen is fairly valued at a price of $18.38 against a GF Value of $19.91. This valuation marks a shift from three months ago when the stock was considered significantly undervalued, with a past GF Value of $21.91.
Introduction to Neogen Corp
Neogen Corporation, headquartered in Lansing, Michigan, is a key entity in the development, manufacture, and marketing of products aimed at ensuring food and animal safety. The company's operations are divided into two main segments: food safety, which accounts for 70% of post-merger sales, and animal safety, making up 20% of sales. Neogen's food safety diagnostics are crucial for detecting substances like pathogens, allergens, and drug residues in food and animal feed. The animal safety segment provides veterinary instruments, pharmaceuticals, disinfectants, and genomics tests for various animals. With 60% of its sales in the United States and the remaining 40% from international markets including Canada, Europe, Asia, and Latin America, Neogen has established a significant global presence.
Assessing Neogen's Profitability
Neogen's financial health is robust, with a Profitability Rank of 7/10, indicating strong profitability within its industry. The company's Operating Margin stands at 7.43%, which is higher than 66.36% of 214 companies in the Medical Diagnostics & Research sector. In terms of returns, Neogen's Return on Equity (ROE) and Return on Assets (ROA) are 0.05% and 0.03% respectively, positioning it above more than half of its industry peers. However, its Return on Invested Capital (ROIC) is -9.99%, though this still ranks better than 44.69% of its competitors. Notably, Neogen has been profitable in 9 out of the last 10 years, underscoring its consistent financial performance.
Growth Trajectory of Neogen
Neogen's Growth Rank is 6/10, reflecting moderate growth prospects. The company's 3-Year Revenue Growth Rate per Share is 3.30%, which is better than 41.54% of 195 companies in its industry. Over a 5-year period, this growth rate per share increases to 4.10%, surpassing 34.52% of 168 companies. Looking ahead, Neogen's estimated revenue growth rate for the next 3 to 5 years is 5.76%, which is more favorable than 21.21% of 66 companies in the sector. This data suggests a steady upward trajectory in Neogen's revenue generation capabilities.
Investor Confidence and Market Position
Neogen's stock is held by prominent investors, indicating strong market confidence. Baillie Gifford (Trades, Portfolio) is the top holder with 11,580,986 shares, representing 5.35% of shares. Ron Baron (Trades, Portfolio) follows with 7,304,967 shares, or 3.37%, and Jeremy Grantham (Trades, Portfolio) holds 1,067,875 shares, accounting for 0.49%. These substantial investments reflect a positive outlook on Neogen's market performance and growth potential.
Competitive Landscape
In comparison to its competitors, Neogen holds a competitive edge in the market. Sotera Health Co (SHC, Financial) has a market cap of $3.92 billion, Guardant Health Inc (GH, Financial) is valued at $4.42 billion, and Twist Bioscience Corp (TWST, Financial) stands at $3.33 billion. These figures place Neogen in a strong position within a tightly contested sector, highlighting its robust market presence and potential for future growth.
Conclusion
Neogen Corp's recent stock performance, coupled with its solid profitability and growth metrics, positions it as a formidable entity in the Medical Diagnostics & Research industry. The company's strategic market positioning and the confidence shown by major investors underscore its potential for sustained growth. As Neogen continues to expand its global footprint and enhance its product offerings, it remains a compelling option for investors looking for stability and growth in the healthcare sector.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
