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Neogen Corp NEOG

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Morningstar’s Analysis

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Starting Coverage of Neogen With $47 FVE; Growing Genomics Forms Foundation of Firm's Narrow Moat

Aaron Degagne Equity Analyst

Analyst Note

| Aaron Degagne |

We are launching coverage of food and animal safety company Neogen with a $47 fair value estimate, and narrow-moat and stable moat trend ratings. Though Neogen is a well-run, high-quality firm, we think this opinion is shared by the market and fully priced in, and shares have recently been trading near $80, well above even our bull-case fair value estimate of $58. With shares up 20% over the last year, we think investors are generally too bullish about the firm’s prospects, and we would suggest waiting for a more attractive entry point.

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Company Profile

Business Description

Neogen Corporation, headquartered in Lansing, Michigan, develops, manufactures, and markets various products for food and animal safety. In food safety (57% of 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 (43% of sales), Neogen sells veterinary instruments, pharmaceuticals, disinfectants, and genomics tests for animals, including cattle, horses, and canines. Neogen is also a market leader in testing for therapeutic drugs for farm and racing animals. Sales in the United States account for 60% of total revenue, while international markets, including Canada, Europe, Asia, and Latin America, account for the other 40% of sales.

620 Lesher Place
Lansing, MI, 48912
T +1 517 372-9200
Sector Healthcare
Industry Diagnostics & Research
Most Recent Earnings Nov 30, 2020
Fiscal Year End May 31, 2021
Stock Type Classic Growth
Employees 1,764