Is it Worth Retaining NEOG Stock in Your Portfolio for Now?

Core Insights - Neogen Corporation (NEOG) is positioned for growth due to ongoing product development and a strong Animal Safety segment, despite concerns regarding solvency and macroeconomic factors [1][7]. Financial Performance - NEOG stock has declined by 51.4% over the past year, underperforming the industry and the S&P 500 [2]. - The company has a market capitalization of $1.31 billion and an estimated earnings growth rate of 36.4% for fiscal 2026, compared to the S&P 500's 16.7% [2]. Product Development - Recent product launches include the Molecular Detection Assay - Listeria Right Now and Igenity BCHF, aimed at improving animal health [3][4]. - Neogen is developing new diagnostic tests and complementary products for Food Safety and Animal Safety markets, with many expected to be available in fiscal 2025 and 2026 [4]. 3M Integration - The merger with 3M's Food Safety business is anticipated to create long-term value, enhancing geographic reach and product offerings [5]. - Neogen has made significant progress in integrating the 3M Food Safety business, despite facing execution and macroeconomic challenges [5]. Market Segments - The Animal Safety segment is experiencing growth, particularly in the beef and dairy markets, with solid performance in biologics and wound care products [9]. - Life Sciences product category growth is driven by increased sales of substrates and reagents, while Biosecurity sales are boosted by insect control products [10]. Financial Concerns - Neogen's solvency is a concern, with cash and cash equivalents at $138.9 million and total outstanding debt of $800 million, resulting in a debt-to-capital ratio of 27.2% [11]. - The macroeconomic environment is negatively impacting Neogen's operations, with rising costs due to inflation, tariffs, and other economic pressures expected to have a $10 million annualized impact [12]. Earnings Estimates - The Zacks Consensus Estimate for Neogen's earnings for fiscal 2026 remains at 45 cents, with revenues projected at $823.8 million, indicating a 7.9% decline from 2025 [13].