Neogen (NEOG): A Bull Case Theory

We came across a bullish thesis on Neogen on Cornerstone Value's Substack. As of 14ᵗʰ July, Neogen's share was trading at $5.22. NEOG's forward P/E was 8.85 according to Yahoo Finance.

Neogen (NEOG) is a market-leading food safety firm that has undergone significant operational hardship due to a failed transformative merger with 3M's Food Safety Division. The company's stock price has plummeted 85% over the past three years, creating a unique investment opportunity. Neogen's core business remains intact and growing, with a comprehensive range of products that touch all nodes in the food production value chain. The company's historical performance has been impressive, with 19,000% TSR over thirty years for a 19% CAGR through 2021.

The recent merger integration has been disastrous, with numerous operational challenges, including 3M's mishandling of its unit divestment, poor merger integrations, and legacy business restructuring. These issues, combined with macro headwinds such as FX and tariff-related impacts, have cast doubt on the company's ability to operate at scale. However, with the new management team and board, there are signs of a turnaround, including a strategic review of its non-core Animal Safety portfolio, which could lead to a sale of $130m in revenue. The company's valuation is attractive, with a 20x exit P/E, which is conservative compared to its historical multiples.

The investment case for Neogen is highly asymmetric, with a potential for significant upside. Even in a bearish scenario, the downside appears limited, given that the business can overcome near-term merger integration hurdles. The company's growth story remains intact, with mid-single-digit core growth, which is currently obfuscated by operational and macro issues. With the alleviation of these issues, there is potential for a material re-rate in the stock. The catalysts for the investment case include growth unmasked, strategic divestment, and post-merger renormalization, making Neogen a highly researchable and well-catalyzed investment opportunity.

Previously, we covered a bullish thesis on Illumina, Inc. by Stock Analysis Compilation in June 2025, which highlighted the company’s dominance in genetic sequencing and strong long-term growth drivers. The company’s stock price has appreciated by approximately 11.80% since our coverage. This is because the thesis played out. The thesis still stands as secular adoption remains intact. Cornerstone Value shares a similar outlook but emphasizes post-merger turnaround at Neogen.

Neogen is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 15 hedge fund portfolios held NEOG at the end of first quarter which was 15 in the previous quarter. While we acknowledge the risk and potential of NEOG as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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