NEOG · Neogen
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $12.25
Note written ·
How this view changed
- · Rating cut from Medium to Low. The note's kill line was crossed, 12 November 2026: Neogen shares closed at $11.19 on 12 November 2026, below the $11.40 kill line and the $11.63 post-results low of 19 October 2026, after the Genomics sale review slipped to early 2027.
Price against the kill line
8.3% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $12.25, set on 12 November 2026. The shares are down 5.4% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $12.25, back over the 50-day moving average as of 12 November 2026, which would show the shares recovering the break below the post-results low. Clearance of the Genomics sale by the ACCC and New Zealand regulators before 2027, or a further raise to the fiscal 2027 revenue guide, would also show the shares leading.
Research onlyNot in the portfolio.
Key figures from the filings · Health Care
Quarter to 31 August 2026, filed 7 October 2026
- Revenue, latest quarter ($M)
- 223
- Revenue, change on a year (%)
- +6.5
- Gross margin (%)
- 47.4
- Operating margin (%)
- −0.8
All filed numbers
What Neogen reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 223 | +6.5 | 47.4 | −0.8 |
| first filed | 225 | −0.1 | 47.8 | 1.4 |
| first filed | 211 | −4.4 | 46.9 | −1.6 |
| first filed | 225 | −2.8 | 47.5 | −2.4 |
| first filed restated | 209 | −3.6 | 45.4 | −7.7 |
| first filed restated | 226 | −4.8 | 41.2 | −271.0 |
| Pre-tax income ($M) | −14.9 |
| Net income ($M) four quarters: −56.1 | −11.9 |
| Diluted shares, change on a year (%) against the quarter to 31 August 2025 | +0.4 |
| Operating cash flow ($M) | Not available |
| Capital spending ($M) | 35.5 |
| Free cash flow ($M) | Not available |
| Cash and short-term investments ($M) | 172 |
| Debt ($M) | Not available |
| Net cash, cash less debt ($M) | Not available |
| Deferred revenue ($M) −37.9% on a year | 3.6 |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 136 |
| Inventory ($M) | 146 |
| Shareholders' equity ($M) | 2,086 |
| Market value ($M) | 2,452 |
| Enterprise value, market value plus net debt ($M) | Not available |
| Enterprise value to sales (×) | Not available |
| Enterprise value to operating income (×) | Not available |
| Price to earnings (×) | Not meaningful |
| Price to book value (×) | 1.2 |
| Free-cash-flow yield (%) | Not available |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 5.5% of shares outstanding sold short, 2.5 days of average trading to cover, +0.7% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $6K | $115K |
| 12 monthsfrom | $12K | $115K |
The thesis
Neogen's shares are more likely to lag the S&P 500 into the fiscal second-quarter report expected around 7 January 2027. They fell below their post-results low on 12 November 2026 despite a raised revenue guide, while the $160 million Genomics sale to Zoetis that funds debt reduction has slipped to early 2027. That report and the Australian and New Zealand competition rulings settle the call.
The $11.40 kill line was crossed on 12 November 2026, when the shares closed at $11.19. That close is under the $11.63 low of 19 October 2026, the weakest close after the fiscal first-quarter results. The crossing shows that a beat and a guidance raise on 6 October 2026 were not enough to hold the shares up once the sale timing moved. The rating is Low because the main remaining support, the sale proceeds, now arrives no earlier than early 2027.
The operating case is intact. Neogen raised fiscal 2027 revenue guidance to $885–890 million on 6 October 2026, and its 4 November 2026 8-K said Zoetis offered to divest certain Australian assets to help clearance. No company news, filing or analyst action explains the declines of 10 November 2026 through 12 November 2026.
What the price reflects: at $11.19 on 12 November 2026 the shares sit below MarketBeat's $12.67 consensus target of 6 November 2026, so the market is giving little credit to the raised guide until debt falls.
Bullish and bearish views on Neogen Corporation
The bull case on Neogen Corporation (NEOG), in brief: growth sped up in the weakest quarter. The bear case: the debt paydown has slipped.
Bull case
- Growth sped up in the weakest quarter. Neogen's 6 October 2026 release reported fiscal first-quarter 2027 revenue of $222.8 million, up 6.5%, with core growth of 8.1%. Food Safety revenue was $163.2 million with 8.1% core growth, up from 5.8% in the fiscal fourth quarter of 2026.
- Profit beat the company's own guide. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $41.6 million, an 18.7% margin, against guidance of about $37 million, per the 6 October 2026 release. Full-year adjusted EBITDA guidance rose to $181–183 million.
- Zoetis has offered a remedy. Neogen's 4 November 2026 8-K says Zoetis offered to divest certain Australian assets to assist clearance. Competition lawyers quoted by PaRR during the Phase 2 review said targeted Australian remedies could be explored.
- The Petrifilm move removes a cost drag. Neogen carried $4.7 million of duplicate Petrifilm manufacturing costs in the fiscal first quarter. On 6 October 2026 the company said it was on track to begin moving production to its Lansing, Michigan plant in November 2026.
- Debt is falling without the sale. On the 6 October 2026 call, management said Neogen repaid $20 million in June and $10 million at the end of September. Net leverage was about 3x, against an investor-day target of below 2.5x.
Bear case
- The debt paydown has slipped. The 4 November 2026 8-K moves the expected end of the Australian and New Zealand reviews to early 2027, later than the December 2026 timing given earlier. Until the sale closes, the $160 million cannot go toward total debt of about $774 million, the figure management gave on 6 October 2026.
- Regulators have stated real concerns. The Australian Competition and Consumer Commission (ACCC) moved the deal to Phase 2 on 17 July 2026 over combining the two largest Australian cattle genomic-testing suppliers, per Beef Central on 4 August 2026. MLex reported that New Zealand's Commerce Commission said the merger may lessen competition.
- Earnings remain negative under accounting rules. The fiscal first quarter produced a net loss of $11.9 million, or $0.05 per share, under generally accepted accounting principles (GAAP), per the 6 October 2026 release.
- An executive sold into the November rise. Chief Scientific Officer Jeremy Yarwood exercised 16,207 options on 3 November 2026 and sold 9,051 shares in the open market at $12.67 on 4 November 2026, per his SEC Form 4. Director Form 4 filings for 29 October 2026 show option exercises at $12.21 and no open-market purchases.
- Product-quality questions are open. Law firms including Pomerantz announced investigations in October 2026 tied to Neogen's HYCOAT contamination case. No charge or lawsuit had appeared in Neogen's filings through the 4 November 2026 8-K.
Price setup
The shares closed at $11.19 on 12 November 2026, per adjusted daily closes. That is 21.5% below the 52-week intraday high of $14.26 set on 23 September 2026, and the 3-month change is −3.9%. The close sits below the 50-day moving average and above the 200-day moving average of $10.51, both as of 12 November 2026.
The decline came in three sessions. The shares closed at $12.08 on 9 November 2026, fell to $11.67 on 10 November 2026, the day Neogen presented at the UBS Global Healthcare Conference, then to $11.60 on 11 November 2026 and $11.19 on 12 November 2026. That break took the shares under the $11.63 post-results low of 19 October 2026 and under the $11.96 results-day close of 6 October 2026.
The 200-day average of $10.51 is the nearest moving average below the last close. The 52-week closing low was $5.41 on 20 November 2025, before the turnaround showed in results. No earnings report falls before the fiscal second-quarter release, so the regulatory timeline is the main dated item in between.
Catalysts ahead
- November 2026: Start of the multi-quarter Petrifilm manufacturing transition at Neogen's Lansing, Michigan plant. A clean start begins removing duplicate production costs of $4.7 million a quarter; a delay or supply gap would weigh on the Food Safety outlook.
- ~7 January 2027 (est.): Fiscal second-quarter 2027 report. Shows whether 8.1% core growth holds beyond the seasonally weak first quarter and whether the $885–890 million revenue guide stands or rises.
- Early 2027 (company est.): Company-expected conclusion of Australian and New Zealand reviews of the Genomics sale. Clearance would release $160 million for debt reduction toward the below-2.5x net leverage target; a prohibition or further delay would push it out.
What would change the view
A daily close above $12.25, back over the 50-day moving average as of 12 November 2026, which would show the shares recovering the break below the post-results low. Clearance of the Genomics sale by the ACCC and New Zealand regulators before 2027, or a further raise to the fiscal 2027 revenue guide, would also show the shares leading.
The line before it, a daily close below $11.40 set on 11 November 2026, was crossed on 12 November 2026: the shares closed at $11.19.
What it trades with
Neogen's shares have moved on company-specific events: the 6 October 2026 results, the 4 November 2026 regulatory update and the unexplained slide of 10 November to 12 November 2026. The Genomics sale ties part of the case to Australian and New Zealand competition decisions rather than to food-safety demand. With net leverage near 3x on 6 October 2026, the shares are likely to stay sensitive to credit conditions until sale proceeds reduce debt; that view fails if the shares rise through a period of rising borrowing costs before the sale closes.
The evidence, claim by claim (8)
- Neogen said Zoetis offered to divest certain assets in Australia to assist clearance of the Genomics sale, and that it expects regulatory review to conclude in early 2027. Neogen Form 8-K, Item 8.01 · as of
- Fiscal first-quarter 2027 revenue was $222.8 million, up 6.5%, with core growth of 8.1%; Food Safety revenue was $163.2 million with 8.1% core growth. Neogen Q1 FY2027 release (8-K exhibit 99.1) · as of
- Fiscal first-quarter 2027 adjusted EBITDA was $41.6 million, an 18.7% margin, against guidance of about $37 million; GAAP net loss was $11.9 million, or $0.05 per share. Neogen Q1 FY2027 release (8-K exhibit 99.1) · as of
- Neogen raised fiscal 2027 revenue guidance to $885–890 million from $880–885 million and adjusted EBITDA guidance to $181–183 million. Neogen Q1 FY2027 release (8-K exhibit 99.1) · as of
- Management put net leverage at about 3x, with total debt near $774 million and cash of $172 million; Neogen repaid $20 million in June and $10 million at end-September. Neogen Q1 FY2027 earnings call · as of
- Chief Scientific Officer Jeremy Yarwood exercised 16,207 options at $11.82 on 3 November 2026 and sold 9,051 shares in the open market at $12.67 on 4 November 2026. SEC Form 4 filed 4 November 2026 · as of
- The ACCC moved Zoetis' $160 million purchase of Neogen's Genomics business to Phase 2 over concern about combining the two largest Australian cattle genomic-testing suppliers. ACCC Phase 2 notice; Beef Central report of 4 August 2026 · as of
- MarketBeat's consensus target for Neogen was $12.67 from five analysts: three positive ratings, one neutral and one negative. Defense World report citing MarketBeat · as of
Sources
- NEOGEN CORP - Form 8-K - FY2026 · sec.gov ·
- Neogen Reports First-Quarter Financial Results for Fiscal Year 2027 · biospace.com
- Neogen Corp (NEOG) Stock Down 3.4% but Still Overvalued -- GF Score: 68/100 · gurufocus.com
- Neogen Corporation (NASDAQ:NEOG) Stock Has Consensus Target Price of $12.67 · defenseworld.net ·
- ACCC to apply closer scrutiny to Zoetis' acquisition of Neogen Genomics · beefcentral.com ·
- Neogen/Zoetis faces significant hurdles to ACCC Phase 2 approval · ionanalytics.com
- Zoetis-Neogen merger may lessen competition, New Zealand regulator says (update*) · mlex.com
- UBS's healthcare conference will include Neogen in Palm Beach Gardens. · stocktitan.net
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