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Key Takeaways Neogen shares climbed 102.8% in a year, far outpacing the industry's 24.7% decline. Food Safety core growth reached 5.8% in fiscal Q4 2026, its highest quarterly rate since fiscal 2023. NEOG plans to raise fiscal 2027 R&D spending about 50%, targeting innovation and pathogen detection. Neogen Corporation (NEOG - Free Report) has witnessed strong momentum over the past year. Shares of the company have risen 102.8%, outperforming the industry’s 24.7% decline. The S&P 500 composite has increased 21.4% during the same time frame.

With healthy fundamentals and strong growth opportunities, this Zacks Rank #2 (Buy) company appears to be a solid wealth creator for its investors at the moment.

Neogen develops and markets food and animal safety products. The company’s Food Safety Division markets culture media and diagnostic test kits to detect foodborne bacteria, natural toxins, food allergens, drug residues, plant diseases and sanitation concerns. 

The Animal Safety division provides veterinary instruments, pharmaceuticals, vaccines, topicals, diagnostic products, rodenticides, cleaners, disinfectants, insecticides and genomics testing services for the global animal safety market. 

Factors Favoring NEOG’s Share Price GrowthNeogen’s share price is trending upward, prompted by its research and development efforts, which include new launches like Neogen MPNTray, the Listeria Right Now molecular detection assay, Igenity BCHF and MDA2 Quantitative Salmonella. The company plans to increase fiscal 2027 R&D spending by about 50%, with investment focused on Petrifilm innovation, digital connectivity, licensed technologies and next-generation pathogen detection and sanitation platforms. 

Investors are also focused on the company’s Food Safety segment’s quarterly performance. In the fourth quarter of fiscal 2026, segment revenues increased 3.1% year over year, while core growth reached 5.8%, the highest quarterly rate since fiscal 2023. Indicator Testing and Culture Media revenues rose 9.5%, while Bacterial and General Sanitation increased 9.9%. The company is also shifting toward global solutions-based selling, with resources focused on strategic accounts, disciplined segmentation and higher-return geographies. It expects this model to deepen portfolio penetration and improve customer engagement. 

Another growth prospective for Neogen is the Animal Safety business, which entered fiscal 2027 with a cleaner supply position after resolving the majority of third-party supplier issues. The company also cited better conditions in production animal markets, with higher meat prices supporting producer profitability and U.S. herd sizes showing signs of stabilization. 

Neogen’s 2022 merger with 3M’s Food Safety business is expected to generate significant long-term value for shareholders of the combined company. The merger continues to strengthen Neogen’s portfolio, with Petrifilm remaining a key asset. The company is shifting Petrifilm production to its Lansing facility, with sellable production expected to begin in November 2026.

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Factors That May Offset NEOG’s GainsNeogen remains materially exposed to foreign currency movements because international sales accounted for 51.2% of fiscal 2026 revenues. The company does not hedge foreign currency translation risk, and its primary exposures include the euro, British pound and Mexican peso. Foreign currency losses increased to $5.8 million in fiscal 2026 from $3.7 million in fiscal 2025. The company’s fiscal 2027 guidance assumes a 1% negative currency impact on reported growth based on prevailing exchange rates. This exposure can create volatility in reported revenues and earnings even when underlying demand is stable.

Additionally, the company faces intense competition from businesses ranging from small firms to divisions of large multinational corporations. Some of these organizations have substantially greater financial resources than the company. These could affect the marketability and profitability of Neogen’s products.

As of the end of fiscal 2026, the company held $185.5 million in cash versus approximately $800 million in debt.

A Look at NEOG’s EstimatesThe Zacks Consensus Estimate for fiscal 2027 EPS has moved north 10.7% to 31 cents in the past 30 days.

The company has an estimated long-term EPS growth rate of 10% compared with the industry’s 10.8%. 

Other Key PicksSome other top-ranked stocks in the broader medical space are Globus Medical (GMED - Free Report) , Veracyte (VCYT - Free Report) and Illumina (ILMN - Free Report) .

Globus Medical has an earnings yield of 5.8% against the industry’s negative 1.7% yield. Its earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 27.9%. GMED’s shares have rallied 42.3% against the industry’s 6.3% decline over the past year.

GMED sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Veracyte, sporting a Zacks Rank #1 at present, has an earnings yield of 4.6% against the industry’s negative 1.7% yield. Shares of the company have risen 38% against the industry’s 6.3% decline. VCYT’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 41.8%. 

Illumina, presently carrying a Zacks Rank #2, has an estimated long-term earnings growth rate of 13% compared with the industry’s 23% growth. Its earnings beat estimates in each of the trailing four quarters, the average surprise being 9.7%. ILMN’s shares have rallied 194.6% compared with the industry’s 24.6% growth over the past year.

Neogen NASDAQ: NEOG reported fiscal fourth-quarter revenue of $225.3 million, with core revenue growth of 4.3%, its highest growth rate of fiscal 2026. The company said momentum improved across both its food safety and animal safety businesses as it entered fiscal 2027, while management outlined increased spending on research and development, commercial capabilities and technology.

Chief Executive Officer Mike Nassif said the company exceeded its adjusted EBITDA guidance for fiscal 2026 and ended the year with improved growth trends. “Fiscal year 2026 was all about stabilization and foundation building,” Nassif said. “In fiscal year 2027, the focus will be on accelerating profitable growth.”

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Food Safety Growth Accelerates Food safety revenue totaled $166.8 million in the fourth quarter and grew 5.8% on a core basis, which Nassif said was the segment’s highest growth rate since 2023, shortly after Neogen’s acquisition of 3M’s food safety business.

Indicator Testing and Culture Media products grew 9%, while bacteria and general sanitation products grew 10%, according to Chief Financial Officer Bryan Riggsbee. Food safety grew in every global division during the quarter, and the company’s Latin America business posted double-digit growth.

Riggsbee said the company has seen signs of improving food-production volumes, citing public comments from food producers indicating volume growth turned positive in the first calendar quarter of 2026 after a largely weak 2025. However, he said food producers still face inflationary pressures linked to the Ukraine war, leading Neogen to retain a measured view of near-term demand.

The company also cited broader food safety trends, including an eight-year peak in food safety recalls and recalled food volume during calendar 2025, food safety regulatory reforms in China, and a 50% increase in food safety litigation and class-action lawsuits over the past five years.

Commercial Overhaul and Product Portfolio Recovery Chief Commercial Officer Joe Freels said Neogen is restructuring its commercial organization around a new go-to-market strategy, including resource allocation across priority countries, customer segments and product lines. The company has identified 14 priority countries where it believes it can generate the greatest returns.

Freels said the company plans to focus direct sales efforts on higher-value accounts while expanding service to smaller customers through e-commerce and customer-service automation. About 40% of food safety revenue currently flows through e-commerce, though that activity is concentrated among larger accounts because of platform limitations.

The company is also creating a strategic-account function to engage senior decision-makers rather than selling primarily at individual plant locations. Management said it is moving from a product-centric sales approach toward selling integrated solutions, services and technology, including the Neogen Analytics platform.

Freels said Neogen entered fiscal 2027 with a restored product portfolio after resolving prior supply and quality problems and improving full and on-time delivery performance. In animal safety, core revenue grew 0.5% year over year and total revenue increased 7% sequentially as the company resolved the majority of supply-related headwinds.

Neogen has also received authorization to sell two topical aerosol products in Texas and Florida to help address the New World screwworm outbreak. Riggsbee said the company expects a modest contribution from those products in the first quarter, while noting that the path and scale of the outbreak remain uncertain.

Margins, Cash Flow and Debt Reduction Fourth-quarter gross margin was 47.8%, while adjusted gross margin was 49.7%, improving 330 basis points from a year earlier. Management said freight and material costs remained elevated, although losses in the sample collection business narrowed to their lowest level of the year.

Adjusted EBITDA was $45.4 million, up 12% year over year, representing a 20.2% margin. Adjusted net income was $18.7 million, or $0.09 per share. Cash flow from operations exceeded $30 million in the quarter and free cash flow exceeded $26 million.

Neogen ended the quarter with about $794 million in gross debt and $185.5 million in cash. The company repaid $20 million of its term loan in late June and said it remained compliant with all debt covenants.

Management said inventory declined by more than $36 million year over year following implementation of a sales and operations planning process. Meanwhile, its on-time and full delivery rate improved 40% since that process began, according to Nassif.

Fiscal 2027 Outlook Includes Higher Investment For fiscal 2027, Neogen guided for revenue of $880 million to $885 million and adjusted EBITDA of $180 million to $182 million. The outlook assumes approximately 3% core growth, including about $92 million of revenue and $13 million of adjusted EBITDA from the Genomics business.

The company expects to update its outlook once the planned sale of the Genomics business to Zoetis closes. The transaction remains subject to regulatory approvals in Australia and New Zealand, which have moved into second-phase reviews. Neogen continues to target closing by the end of the first half of fiscal 2027 and expects to use the estimated $140 million in net proceeds for debt repayment and investment.

First-quarter fiscal 2027 revenue guidance: $207 million to $209 million. First-quarter adjusted EBITDA guidance: approximately $37 million. Fiscal 2027 R&D spending: expected to rise about 50%. Transformation investments: expected to total $25 million, compared with about $22 million in fiscal 2026. Management said the planned investment increase will limit the pace of margin expansion in fiscal 2027, even as operational efficiency initiatives are expected to offset part of the spending. The company is targeting inventory write-downs, purchase price variance, pricing execution, supplier management and sample collection margins as areas for savings.

Neogen also said its Petrifilm manufacturing transition remains on schedule. It expects to fully validate its first SKU in August and begin a multi-quarter transition to manufacture sellable product in November 2026. Management expects the transition to ultimately contribute 200 to 300 basis points of gross-margin expansion as production ramps and is optimized in fiscal 2028.

Looking longer term, Nassif said Neogen aims to lift adjusted EBITDA margins to about 30%. The company plans to expand R&D toward a long-term target approaching 5% of revenue, with investments spanning Petrifilm, pathogens, sanitation, digital connectivity and potential technology licensing opportunities. Management said these initiatives are expected to begin making a more meaningful contribution to revenue growth starting in fiscal 2029 and beyond.

About Neogen (NASDAQ:NEOG)Neogen Corporation is a global provider of food and animal safety products, offering a broad portfolio of diagnostic and testing solutions. Headquartered in Lansing, Michigan, the company develops and manufactures tests designed to detect foodborne pathogens, allergens and toxins in food, beverage and environmental samples. Since its founding in 1982, Neogen has focused on delivering rapid, accurate and user‐friendly assays to food processors, grain handlers and quality laboratories around the world.

In the food safety arena, Neogen's product lineup includes immunoassay kits, molecular diagnostics and enrichment media for pathogens such as Salmonella, Listeria and E.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].

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