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Neogen (NEOG) Down 13.6% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Neogen (NEOG - Free Report) . Shares have lost about 13.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Neogen due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Neogen Q1 Earnings Top Estimates, Operating Margin Down
Neogen’sfirst-quarter fiscal 2023 earnings per share (EPS) of 15 cents surpassed the year-ago figure as well as the Zacks Consensus Estimate by 6.3%.
Revenues for the fiscal first quarter increased 3% on a year-over-year basis to $132.3 million. However, it lagged the Zacks Consensus Estimate by 2.5%. The first quarter was the 121st quarter out of the past 127 quarters for which Neogen reported a year-over-year revenue increase.
Segments in Detail
The company registered Food Safety revenues of $67.6 million in the first quarter, indicating 3% (up 9% at constant exchange rate or CER) year-over-year growth. The upside was driven by a 25% increase in aflatoxin test kits, primarily due to an aflatoxin outbreak in Brazil and new business in Mexico and Central America.
Animal Safety revenues in the fiscal first quarter were $67.7 million, up 3% (up 4% at CER) year over year. The upside can be attributed to 21% growth in sales of animal care products, including supplements, vitamin injectables, and companion animal parasiticides, enhanced by the acquisition of CAPInnoVet in September 2021.
Revenues from Neogen’s animal genomics business increased 7% on a year-over-year basis in the fiscal first quarter. Sales from the company’s December 2021 acquisition of Genetic Veterinary Sciences were partially offset by lower sample volumes in the porcine market and a difficult prior-year comparison due to a large research project.
International revenues increased 2% year over year (up 10% at CER), representing 39.1% of overall sales of Neogen in the reported quarter.
The company’s U.K. business increased 19% in pounds during the fiscal year, led by a 31% increase in sales of cleaners and disinfectants. Brazil revenues increased 14% in Brazilian reals, driven by strong sales of the company’s mycotoxin test kits, including aflatoxin and deoxynivalenol (DON), as well as increases in veterinary instruments and genomics testing.Latin America revenues rose 20% in Mexican pesos, led by increases across the company’s diagnostic testing portfolio and culture media, as well as higher sales of rodent control products and cleaners and disinfectants.
Neogen’s revenues from China were down 14%in Chinese yuan compared to the previous fiscal year, attributable to the country's COVID-19 lockdowns in the second half of fiscal 2022. Neogen’s Australasia revenues declined 2% in local currency as a large culture media order in the prior year was partially offset by bovine genomic service increases.
Margin Details
Neogen’s fiscal first-quarter gross profit increased 3.8% year over year to $62.3 million. The gross margin expanded 28 basis points (bps) to 47.1%.
Sales and marketing expenses rose 13.8% to $23.4 million, whereas administrative expenses rose 108.8% from the prior-year quarter to $27.9 million. Research & development expenses were $4.9 million, up 12.9% from the year-ago quarter. Operating costs totaled $56.2 million, up 46.9% year over year.
In the reported quarter, operating income was $6.1 million, down 72.1% from the year-ago quarter’s level. Operating margin contracted 1237 bps to 4.6%.
Cash Position
The company exited the fiscal first quarter with cash and investments of $374.7 million, down from $381.1 million at the end of the fiscal fourth quarter. The company had no debt on the balance sheet at quarter-end.
Neogen’s New Addition in Biosecurity Portfolio: Oct 10, 2022
Neogen launched COMPANIONRTU, a ready-to-use formulation of its COMPANION disinfectant. This is a new addition to its veterinary biosecurity portfolio. COMPANION RTU is a ready-to-use, non-irritating, non-corrosive disinfectant requires no mixing, ensuring dilution accuracy and saving users time in their biosecurity efforts.
Neogen launched its new Encompass platform for bovine genomic results management and visualization. This advanced data management solution will allow Igenity customers to gain greater insight into their data and maximize the benefits of genomic testing.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -82.76% due to these changes.
VGM Scores
At this time, Neogen has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Neogen has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Neogen (NEOG) Down 13.6% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Neogen (NEOG - Free Report) . Shares have lost about 13.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Neogen due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Neogen Q1 Earnings Top Estimates, Operating Margin Down
Neogen’sfirst-quarter fiscal 2023 earnings per share (EPS) of 15 cents surpassed the year-ago figure as well as the Zacks Consensus Estimate by 6.3%.
Revenues for the fiscal first quarter increased 3% on a year-over-year basis to $132.3 million. However, it lagged the Zacks Consensus Estimate by 2.5%. The first quarter was the 121st quarter out of the past 127 quarters for which Neogen reported a year-over-year revenue increase.
Segments in Detail
The company registered Food Safety revenues of $67.6 million in the first quarter, indicating 3% (up 9% at constant exchange rate or CER) year-over-year growth. The upside was driven by a 25% increase in aflatoxin test kits, primarily due to an aflatoxin outbreak in Brazil and new business in Mexico and Central America.
Animal Safety revenues in the fiscal first quarter were $67.7 million, up 3% (up 4% at CER) year over year. The upside can be attributed to 21% growth in sales of animal care products, including supplements, vitamin injectables, and companion animal parasiticides, enhanced by the acquisition of CAPInnoVet in September 2021.
Revenues from Neogen’s animal genomics business increased 7% on a year-over-year basis in the fiscal first quarter. Sales from the company’s December 2021 acquisition of Genetic Veterinary Sciences were partially offset by lower sample volumes in the porcine market and a difficult prior-year comparison due to a large research project.
International revenues increased 2% year over year (up 10% at CER), representing 39.1% of overall sales of Neogen in the reported quarter.
The company’s U.K. business increased 19% in pounds during the fiscal year, led by a 31% increase in sales of cleaners and disinfectants. Brazil revenues increased 14% in Brazilian reals, driven by strong sales of the company’s mycotoxin test kits, including aflatoxin and deoxynivalenol (DON), as well as increases in veterinary instruments and genomics testing.Latin America revenues rose 20% in Mexican pesos, led by increases across the company’s diagnostic testing portfolio and culture media, as well as higher sales of rodent control products and cleaners and disinfectants.
Neogen’s revenues from China were down 14%in Chinese yuan compared to the previous fiscal year, attributable to the country's COVID-19 lockdowns in the second half of fiscal 2022. Neogen’s Australasia revenues declined 2% in local currency as a large culture media order in the prior year was partially offset by bovine genomic service increases.
Margin Details
Neogen’s fiscal first-quarter gross profit increased 3.8% year over year to $62.3 million. The gross margin expanded 28 basis points (bps) to 47.1%.
Sales and marketing expenses rose 13.8% to $23.4 million, whereas administrative expenses rose 108.8% from the prior-year quarter to $27.9 million. Research & development expenses were $4.9 million, up 12.9% from the year-ago quarter. Operating costs totaled $56.2 million, up 46.9% year over year.
In the reported quarter, operating income was $6.1 million, down 72.1% from the year-ago quarter’s level. Operating margin contracted 1237 bps to 4.6%.
Cash Position
The company exited the fiscal first quarter with cash and investments of $374.7 million, down from $381.1 million at the end of the fiscal fourth quarter. The company had no debt on the balance sheet at quarter-end.
Neogen’s New Addition in Biosecurity Portfolio: Oct 10, 2022
Neogen launched COMPANIONRTU, a ready-to-use formulation of its COMPANION disinfectant. This is a new addition to its veterinary biosecurity portfolio. COMPANION RTU is a ready-to-use, non-irritating, non-corrosive disinfectant requires no mixing, ensuring dilution accuracy and saving users time in their biosecurity efforts.
Neogen Launches Genomic Management Technology: Sep 29, 2022
Neogen launched its new Encompass platform for bovine genomic results management and visualization. This advanced data management solution will allow Igenity customers to gain greater insight into their data and maximize the benefits of genomic testing.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -82.76% due to these changes.
VGM Scores
At this time, Neogen has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Neogen has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.