Neogen (NEOG): Exploring Valuation Gaps After a Challenging Year for Shares

Neogen (NEOG) has been on investors’ radar with its shares posting a slight decline over the past month. For those watching the food and animal safety sector, the recent price moves invite a closer look at what is driving sentiment.

See our latest analysis for Neogen.

Neogen’s momentum has clearly faded in 2024, with a year-to-date share price return of -50.42% and a 1-year total shareholder return of -55.32%. These figures reflect market caution about its prospects. Despite a modest 3.50% share price gain over the past 90 days, longer-term returns remain deeply negative. This suggests that the market is still weighing potential growth against ongoing risks.

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The company’s steep drop over the past year raises a critical question for investors: is Neogen undervalued at current levels, or is the market accurately reflecting its growth and risk profile? Could this be a hidden buying opportunity, or are expectations already baked in?

Most Popular Narrative: 27.5% Undervalued

With Neogen last closing at $5.92 per share, the most-followed narrative estimates a fair value near $8.17, highlighting a notable gap. This sets the tone for a deeper look at the unique assumptions driving such confidence in Neogen’s future potential.

Ongoing global complexity and risks within the food supply chain, alongside heightened consumer expectations for food safety and transparency, will drive further adoption of Neogen's innovative pathogen detection and digital solutions by food producers and regulators. This may expand the company's addressable market and underpin sustainable long-term revenue expansion.

Read the complete narrative.

How does Neogen get to a much higher worth despite recent losses? The narrative teases a future where global adoption, margin recovery, and bold performance pivots may rewrite today’s market story. Find out which game-changing assumptions, hidden in plain sight, fuel this outlook and reshape the valuation calculus.

Result: Fair Value of $8.17 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing operational integration challenges and sustained macroeconomic pressures could disrupt the expected margin recovery and slow Neogen’s path to long-term growth.

Find out about the key risks to this Neogen narrative.

Another View: What Do Sales Ratios Say?

Looking at how Neogen is valued on its price-to-sales ratio, the story shifts. Neogen trades at 1.5x sales, which is cheaper than the US Medical Equipment industry average of 3.3x and its peers at 4.9x. However, this is still higher than its own fair ratio of 1.1x. This gap suggests the market could adjust the valuation lower, but also hints at possible upside if sales growth outpaces expectations. Could the company's fundamentals or market mood tip the balance?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Neogen Narrative

If you have a different perspective or want to dig into the numbers firsthand, you can shape your own narrative in just a few minutes. Do it your way.

A great starting point for your Neogen research is our analysis highlighting 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.