Neogen Corporation (NEOG Quick QuoteNEOG - Free Report) reported fourth-quarter fiscal 2024 earnings per share (EPS) of 10 cents, down 28.6% from the prior year’s comparable period figure. The reported figure also missed the Zacks Consensus Estimate by 16.7%.

The full-year adjusted EPS was 45 cents per share, down 19.6% compared with the year-ago figure. The metric lagged the Zacks Consensus Estimate by 2.2%.

Revenues in the fiscal fourth quarter fell 2.1% on a year-over-year basis to $236.8 million. Core revenues were 2%. Acquisitions and discontinued product lines contributed 0.1%, while foreign currency had a negative impact of 4.2%. However, the metric surpassed the Zacks Consensus Estimate by 5.1%.

The company reported revenues of $924.2 million in fiscal 2024, which rose 12.4% from the year-ago period. The same beat the Zacks Consensus Estimate by 1.3%.

Segments in Detail

Within segments, Neogen registered Food Safety revenues of $166.9 million in the fiscal fourth quarter, marking a 1.4% decrease from the fourth-quarter 2023 figure. Our model projected the segment’s revenues to be $155 million for the fourth quarter.

This consisted of 4.3% core growth, a 0.2% contribution from acquisitions and discontinued product lines and a negative foreign currency impact of 5.9%. The core revenue growth was led by the Indicator Testing, Culture Media & Other product category, which benefited from strong growth in Petrifilm, as well as culture media and food quality and nutritional analysis products.

Revenues from Animal Safety were $69.9 million, down 3.7% year over year. Our model’s projection was $71.2 million.  

This consisted of a 3.3% core revenue decline, a 0.3% headwind from discontinued product lines and a negative foreign currency impact of 0.1%. On a global basis, the company’s Genomics business experienced a core revenue decline in the mid-single-digit range.

Margin Details

Neogen’s fiscal fourth-quarter gross profit plunged 7.9% year over year to $113.5 million. The gross margin contracted 302 basis points (bps) to 47.9% due to a 4% increase in the cost of revenues.

Sales and marketing expenses rose 3.5% to $44.4 million, whereas administrative expenses increased 2.3% from the prior-year quarter to $51 million. R&D expenses were $5.1 million, down 27.1% year over year. Operating costs totaled $100.5 million, up 0.7% from last year’s quarter. The operating margin fell 45 bps in the quarter under review.

Cash Position

Neogen exited the fourth quarter of fiscal 2024 with cash and cash equivalents of $170.6 million compared with $163.2 million at the end of fiscal 2023. The company’s non-current liabilities included a total outstanding debt of $900 million and a committed borrowing headroom of $150 million.

Full-Year Guidance

Neogen initiated its financial outlook for fiscal 2025.

The company anticipates full-year revenues between $925 million and $955 million. The Zacks Consensus Estimate is currently pegged at $983.2 million.

Capital expenditures are likely to be approximately $85 million, including an approximate $55 million related specifically to the integration of the former 3M Food Safety Division. 

Our Take

Neogen missed both earnings and revenue forecasts in the fourth quarter of fiscal 2024. The Animal Safety segment posted lower quarterly sales, primarily due to the Genomics business in the United States. In the Food Safety segment, volumes remained mostly down on a year-over-year basis and are likely to see a slow and gradual improvement during fiscal 2025. Additionally, the contraction of both margins in the quarter is discouraging. Foreign currency turned out to be a major headwind this time.

On a positive note, Neogen successfully completed the relocation of the sample handling product line, expected to ramp up to full production levels by the end of the first quarter of fiscal 2025. In addition, order fulfillment rates improved throughout the quarter and are no longer seen as a constraint for the company. With respect to product technology, Neogen recently witnessed notable developments in two of its priority growth areas — pathogen detection and Petrifilm.

Zacks Rank and Key Picks

Neogen currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader medical space are Intuitive Surgical (ISRG Quick QuoteISRG - Free Report) , Abbott Laboratories, Inc. (ABT Quick QuoteABT - Free Report) and Quest Diagnostics (DGX Quick QuoteDGX - Free Report) .

Intuitive Surgical reported a third-quarter 2024 adjusted EPS of $1.78, which beat the Zacks Consensus Estimate by 16.3%. Revenues of $2.01 billion topped the consensus estimate by 2%. ISRG currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Intuitive Surgical has an estimated long-term earnings growth rate of 16.1% in 2024 compared with the industry’s 14.1%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 8.97%.

Abbott, carrying a Zacks Rank #2 (Buy), reported third-quarter 2024 earnings of $1.14, which surpassed the Zacks Consensus Estimate by 3.6%. Revenues of $10.38 billion topped the Zacks Consensus Estimate by 0.3%. 

ABT has an estimated earnings growth rate of 10.1% for 2025 compared      with the S&P 500’s 9.3%. The company surpassed earnings estimates in each of the trailing four quarters, the average being 2.34%.

Quest Diagnostics, carrying a Zacks Rank #2, reported a third-quarter adjusted EPS of $2.35, which surpassed the Zacks Consensus Estimate by 1.7%. Revenues of $2.40 billion exceeded the Zacks Consensus Estimate by 0.5%.

DGX’s historical five-year earnings growth rate of 7.4% compared favorably with the industry’s 4.2%. The company surpassed earnings estimates in each of the trailing four quarters, the average being 3.31%.