Value
5.7/10data confidence 83%| Component | Sub-score |
|---|---|
| P/S | 8.8 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 3.9 |
| PEG | 10.0 |
| Analyst target | 6.0 |
- ▸Forward P/E: 30.6x
- ▸PEG: 0.28
NEOG · Why this verdict
Why Neogen (NEOG) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score4.7/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Neogen Corporation operates in food safety diagnostics with significant international revenue exposure, but declining top-line growth, weak quality scores, and a high concentration in a single product segment create structural headwinds that outweigh its favorable momentum setup.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Revenue declined 4% year-over-year and the overall quality score of 3.1 falls below the minimum threshold of 4.0, reflecting thin free cash flow margins of 2% and no identifiable competitive moat. Quality breakdown | Revenue growth returns to positive territory above 3% year-over-year and quality score improves above 4.0 within 12 months. | →Stable |
| CounterEven with declining revenue, the Piotroski F-Score of 6.7 and positive free cash flow suggest the business remains solvent and capable of self-funding operations. | ||
Neogen's food safety segment accounts for 71% of revenue and its international business generates over 50% of sales, meaning any adverse regulatory or currency-driven headwinds in these concentrated areas could disproportionately impact results. Bear case | Revenue diversification improves such that the food safety segment contributes below 65% of total revenue within 12 months through growth in adjacent segments. | →Stable |
| CounterDeep focus on food safety diagnostics may be a competitive advantage if global food safety regulations continue to tighten, driving recurring demand. | ||
Neogen beat estimates in 2 of the last 4 quarters with an average surprise of roughly 21%, but a significant miss of -44% in one quarter indicates inconsistency that limits confidence in future earnings delivery. Earnings | Neogen beats or meets consensus EPS in at least 3 of the next 4 quarters without a miss exceeding 10%. | →Stable |
| CounterThe most recent quarter showed a strong 69% beat, which may indicate improving operational execution heading into the next reporting cycle. | ||
A forward P/E of 31x and PEG of 0.28 appear attractive relative to growth expectations, but with revenue contracting and quality well below peer averages, the premium valuation carries meaningful downside risk. Valuation breakdown | Revenue growth returns to above 5% so that the PEG ratio remains below 0.4 and forward P/E compresses below 25x through earnings expansion. | →Stable |
| CounterAnalyst consensus sees 29% upside to the price target, suggesting the market may still be underpricing a recovery in the food safety business. | ||
Revenue declined 4% year-over-year and the overall quality score of 3.1 falls below the minimum threshold of 4.0, reflecting thin free cash flow margins of 2% and no identifiable competitive moat.
→StableQuality breakdown
- Expectation
- Revenue growth returns to positive territory above 3% year-over-year and quality score improves above 4.0 within 12 months.
CounterEven with declining revenue, the Piotroski F-Score of 6.7 and positive free cash flow suggest the business remains solvent and capable of self-funding operations.
Neogen's food safety segment accounts for 71% of revenue and its international business generates over 50% of sales, meaning any adverse regulatory or currency-driven headwinds in these concentrated areas could disproportionately impact results.
→StableBear case
- Expectation
- Revenue diversification improves such that the food safety segment contributes below 65% of total revenue within 12 months through growth in adjacent segments.
CounterDeep focus on food safety diagnostics may be a competitive advantage if global food safety regulations continue to tighten, driving recurring demand.
Neogen beat estimates in 2 of the last 4 quarters with an average surprise of roughly 21%, but a significant miss of -44% in one quarter indicates inconsistency that limits confidence in future earnings delivery.
→StableEarnings
- Expectation
- Neogen beats or meets consensus EPS in at least 3 of the next 4 quarters without a miss exceeding 10%.
CounterThe most recent quarter showed a strong 69% beat, which may indicate improving operational execution heading into the next reporting cycle.
A forward P/E of 31x and PEG of 0.28 appear attractive relative to growth expectations, but with revenue contracting and quality well below peer averages, the premium valuation carries meaningful downside risk.
→StableValuation breakdown
- Expectation
- Revenue growth returns to above 5% so that the PEG ratio remains below 0.4 and forward P/E compresses below 25x through earnings expansion.
CounterAnalyst consensus sees 29% upside to the price target, suggesting the market may still be underpricing a recovery in the food safety business.
Per-dimension breakdown
Quality
3.1/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.0 |
| ROA | 0.0 |
| Gross margin | 5.0 |
| Op margin | 0.0 |
| Net margin | 0.0 |
| Current ratio | 9.1 |
| FCF quality | 3.4 |
| Moat | 4.0 |
| Piotroski F | 6.7 |
- ▸FCF-positive but moderate margins (FCF margin 2%, FCF yield 1.0%)
- ▸No competitive moat
Growth
5.7/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 1.4 |
| EPS growth | 10.0 |
- ▸Declining revenue: -4%
Momentum
4.5/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 7.1 |
| OBV | 1.0 |
| MA position | 9.0 |
| Volume | 0.0 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 8.2 |
| erm sentiment | 5.9 |
- ▸Analyst upside: 25%
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
2.0/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 6.5 |
| quality rank | 0.8 |
| growth rank | 0.5 |
Technical
2.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 0.4 |
| 52w position | 6.8 |
Risk (lower is worse)
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 6.0 |
| days to cover | 5.6 |
| volatility | 3.0 |
| put call | 10.0 |
| implied vol | 5.1 |
| max pain risk | 3.0 |
| beta | 4.0 |
| debt equity | 8.5 |
- ▸Above max pain $2
- ▸Concentration risks: 3 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 6.5 |
| earnings history | 5.6 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (6)
- MOMENTUM:4.5>=4.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:34d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:0.7<1.5@spot
Warning (2)
- MOMENTUM:4.5<5.5 (soft — BUY_NOW allowed but watch)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
0.65
Upside
+6.5%
Downside
10.0%
Sizing output
AVOID
SetupBREAKOUT — Golden cross, above all MAs, RSI 57, MACD bullish
EdgeNO_EDGE — No clear edge identified
SuitabilityAGGRESSIVE — Beta 1.80>1.3, MCap $2.0B<$5B
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Catalyst at 6.8 could not lift the engine output above the verdict floor. Failed gate signal: ASYMMETRY:0.7<1.5@spot.
The strongest dimensions are Catalyst at 6.8, Sentiment at 6.3, and Value at 5.7; the weakest are Peer rank at 2.0, Technical at 2.4, and Quality at 3.1. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of 0.65 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Neogen's food safety segment accounts for 71% of revenue and its international business generates over 50% of sales, meaning any adverse regulatory or currency-driven headwinds in these concentrated areas could disproportionately impact results.
Trip ifRevenue from the food safety segment rises above 75% of total revenue for 2 consecutive quarters.
- P2Revenue declined 4% year-over-year and the overall quality score of 3.1 falls below the minimum threshold of 4.0, reflecting thin free cash flow margins of 2% and no identifiable competitive moat.
Trip ifRevenue declines more than 5% year-over-year in any single quarter.
- P3Neogen beat estimates in 2 of the last 4 quarters with an average surprise of roughly 21%, but a significant miss of -44% in one quarter indicates inconsistency that limits confidence in future earnings delivery.
Trip ifEPS surprise falls below -20% in at least 2 of the next 4 quarters.
- P4A forward P/E of 31x and PEG of 0.28 appear attractive relative to growth expectations, but with revenue contracting and quality well below peer averages, the premium valuation carries meaningful downside risk.
Trip ifPrice drops below $8.66 stop-loss or forward P/E rises above 40x without revenue growth exceeding 10%.