Neogen (NEOG): Buy, Sell, or Hold Post Q4 Earnings?

Neogen Corporation (NEOG) recently reported its fourth-quarter and full-year fiscal 2024 earnings, providing investors with valuable insights into the company's performance and future prospects. As the earnings season unfolds, investors may be wondering whether to buy, sell, or hold Neogen shares. This article will analyze the company's recent earnings, revenue trends, and strategic initiatives to help inform a decision.



Neogen's earnings and revenue trends have been mixed over the past four quarters, with some quarters showing strong growth and others experiencing declines. In the fourth quarter of fiscal 2024, Neogen's revenues were $236.8 million, a decrease of 2.1% compared to the prior year. Core revenue growth was 2.0%, acquisitions contributed 0.1%, and foreign currency had a negative impact of 4.2%. For the full year, Neogen's revenues were $924.2 million, an increase of 12.4% compared to the prior year. Core revenue growth was 1.8%, acquisitions contributed 11.9%, and foreign currency was a headwind of 1.3%.



Neogen's management team has responded to the challenges faced in the recent quarter by focusing on several strategic initiatives to drive future growth and profitability. The company has made significant progress in integrating the former 3M Food Safety business, improving order fulfillment rates, and focusing on demand generation. Neogen has also maintained core revenue growth and adapted to soft but stable end-market conditions by expecting a trend of slow, gradual improvement in food production volumes over the course of the fiscal year.



As Neogen continues to execute its strategic initiatives, investors should consider the following factors when deciding whether to buy, sell, or hold the company's shares:

1. Acquisitions: Neogen has grown through strategic acquisitions, which have contributed significantly to its revenue growth. As the company continues to explore potential acquisitions, investors should monitor the impact on Neogen's financial performance and valuation.
2. Core Revenue Growth: Neogen's organic growth, or core revenue growth, has been a significant driver of its overall performance. As end-market conditions improve, Neogen's core revenue growth is expected to increase, driven by its broad product portfolio and consultative customer service.
3. End-market Conditions: The demand for Neogen's products is influenced by end-market conditions. As food production volumes gradually improve, Neogen's demand for its products is likely to increase, driving revenue growth.
4. Cost Management: Neogen has taken steps to manage costs, such as exiting transition service agreements and adjusting inventory levels. As the company continues to focus on driving improvements in the combined operations, investors should monitor its ability to manage costs and maintain profitability.

In conclusion, Neogen's recent earnings and revenue trends have been mixed, with some quarters showing strong growth and others experiencing declines. The company's management team has responded to the challenges faced in the recent quarter by focusing on several strategic initiatives to drive future growth and profitability. As investors consider whether to buy, sell, or hold Neogen shares, they should monitor the company's acquisitions, core revenue growth, end-market conditions, and cost management efforts. By staying informed about Neogen's performance and strategic initiatives, investors can make more informed decisions about the company's future prospects.