1-Star Price
PREMIUM
5-Star Price
PREMIUM
Economic Moat
PREMIUM
Capital Allocation
PREMIUM
Narrow-moat Neogen had a very good quarter and reported headline year-over-year revenue growth of 17%, exceeding our expectations and consensus (aggregated by Visible Alpha). Despite this outperformance on the top line, there were offsetting valuation factors related to elevated general and administrative expenses and an increasing share count. We are maintaining our $47 fair value estimate, and we continue to view shares as overvalued.
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.
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