Neogen Corporation (NEOG): A Bull Case Theory

Core Thesis - Neogen Corporation presents a compelling investment opportunity as it approaches a significant operational inflection point following its merger with 3M's Food Safety division, despite previous challenges [2][3]. Company Overview - Neogen's share price was $5.92 as of December 1st, with trailing and forward P/E ratios of 822.50 and 16.00 respectively [1]. - The company has faced operational strains post-merger, including duplicative manufacturing costs and delays in transitioning production [2]. Financial Performance - The stock has declined over 80% from pre-merger levels, leading to a valuation of approximately 10x FY27 EBITDA, which is near financial-crisis lows [3]. - Neogen is expected to unlock margin benefits from its new $208 million Lansing facility, with capital expenditures projected to decrease significantly in FY26 [3]. Strategic Changes - A pivotal change occurred with the hiring of Mike Nassif in August 2025, who is known for portfolio rationalization and turnaround strategies [4]. - Under Nassif's leadership, Neogen has begun divesting lower-quality businesses, including the $130 million sale of its cleaners and disinfectants unit, to accelerate debt reduction [4]. Future Outlook - With improved business quality and clearer integration visibility, Neogen is positioned for a meaningful rerating, with potential for the stock to triple over the next two years if execution remains strong [5]. - The anticipated ramp-up of Petrifilm production and stronger free cash flow are expected to support renewed investor confidence and lower leverage [5].