William Blair analyst Brandon Vazquez has reiterated their neutral stance on NEOG stock, giving a Hold rating today.
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Brandon Vazquez has given his Hold rating due to a combination of factors influencing Neogen’s current financial standing. The company’s fiscal first-quarter results showed promising headline numbers, with total sales and EBITDA surpassing expectations, and management reaffirming full-year guidance. This is a positive development following previous years of execution challenges and missed targets. Additionally, the new CEO, Mike Nassif, appears to be concentrating on revitalizing top-line growth, optimizing operating expenses, and streamlining the R&D function.
However, there are concerns that temper the optimism. The first-quarter performance was primarily driven by the animal safety segment, which is strategically less significant compared to the food safety segment that underperformed. Moreover, while EBITDA slightly exceeded expectations, the 17% margin is the lowest observed in over five years, attributed to temporary integration issues. Given these mixed signals and with shares trading at 11 times the projected 2026 EBITDA, Vazquez maintains a Market Perform rating, anticipating that any significant share price appreciation will depend on more consistent and sustainable improvements in the company’s financial performance.
In another report released today, TR | OpenAI – 4o also reiterated a Hold rating on the stock with a $6.00 price target.