Why Neogen Stock Blasted More Than 31% Higher Today
Key Points
The specialized healthcare company posted a beat-and-raise fiscal second quarter.
Investors rushed into the stock, despite the fact that revenue and profitability were both down slightly year-over-year.
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The stock of healthcare company Neogen (NASDAQ: NEOG) was the very picture of financial health on Thursday, as its share price ballooned by over 31% that trading session. Investors were clearly impressed by the quarterly earnings report published in the morning by the company.
Narrower-than-expected declines
For its second quarter of fiscal 2026, Neogen's top line sank by almost 3% year-over-year to land at $224.7 million. The food and animal safety company's net income not according to generally accepted accounting principles (GAAP) also declined, although not to a worrying degree, to $22.6 million ($0.10 per share) from the year-ago profit of $24.4 million.
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Despite the drops, both key metrics crushed the average analyst estimates. The consensus pundit projection for revenue was barely over $208 million, while that for non-GAAP (adjusted) net income was only $0.03 per share.
Neogen attributed the revenue slide to divestitures and product lines that have been discontinued, while it chalked up the bottom-line dip to a fall in operating income.
Full-year projections increased
The second quarter was a beat-and-raise one for Neogen, as it upped its guidance for the entirety of the current fiscal year.
Management now feels the company will earn $845 million to $855 million in revenue; the previous expectation was $820 million to $840 million. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) should be roughly $175 million. Neogen's had formerly been guiding for a range of $165 million to $175 million. The company did not proffer a net income forecast.
While a beat-and-raise frame is always an impressive feat, it feels to me that investors are getting a bit overly excited about Neogen's latest results. I'd be more encouraged if that top line was growing, even slightly. Especially with Wednesday's massive post-earnings pop, I'm finding it hard to get bullish about the future of this stock.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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