Does Neogen Corporation (NEOG) Have a Significant Upside?

Baron Funds, an investment management company, released its “Baron Small Cap Fund” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the second quarter of 2025, the fund was up 10.38%% (Institutional Shares) compared to the Russell 2000 Growth Index’s (the Index) 11.97% return. Year to date, the Fund is up 0.36% compared to the index’s (0.48)% return. Small-cap stocks recovered well during the quarter and performed in line with the overall market but have significantly trailed larger-cap stocks this year. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its second-quarter 2025 investor letter, Baron Small Cap Fund highlighted stocks such as Neogen Corporation (NASDAQ:NEOG). Neogen Corporation (NASDAQ:NEOG) engages in the development of various products and services dedicated to food and animal safety. The one-month return of Neogen Corporation (NASDAQ:NEOG) was -2.68%, and its shares lost 69.06% of their value over the last 52 weeks. On August 8, 2025, Neogen Corporation (NASDAQ:NEOG) stock closed at $5.08 per share, with a market capitalization of $1.103 billion.

Baron Small Cap Fund stated the following regarding Neogen Corporation (NASDAQ:NEOG) in its second quarter 2025 investor letter:

"Shares of Neogen Corporation (NASDAQ:NEOG), a leading provider of food and animal safety products, detracted from performance. The company reported weak fiscal Q3 2025 earnings, lowered its fiscal 2025 guidance, and announced that its CEO will step down later this year. Several years of M&A integration and operational hiccups have cratered the stock. We expect near-term volatility to persist but retain long-term conviction. We added to our position as shares have significant upside. The company is selling non-core businesses at goal prices, which is de-levering its balance sheet and should enhance the growth profile. We are hopeful that the company is nearing the end of its transition and will revert to nice growth shortly."

Neogen Corporation (NASDAQ:NEOG) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 15 hedge fund portfolios held Neogen Corporation (NASDAQ:NEOG) at the end of the first quarter, which was 15 in the previous quarter. While we acknowledge the potential of Neogen Corporation (NASDAQ: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.

In another article, we covered Neogen Corporation (NASDAQ:NEOG) and shared Conestoga Capital Advisors' views on the company. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.