Neogen's Q2 Earnings and Revenues Beat Estimates, Stock Climbs

Neogen Corporation NEOG reported second-quarter fiscal 2026 adjusted earnings per share (EPS) of 10 cents, which topped the Zacks Consensus Estimate by 42.86%. However, the bottom line compares unfavorably to 11 cents in the prior-year quarter. 

Neogen’s Q2 Revenues

Revenues in the quarter decreased 2.8% on a year-over-year basis to $224.69 million. Meanwhile, core revenues increased 2.9%. Divestitures and discontinued product lines had a negative impact of 6.6%, while foreign currency had a positive impact of 0.9%. The metric topped the Zacks Consensus Estimate by 7.93%.

Following the Jan. 8 premarket announcement, NEOG stock jumped 31.6% to close the session at $9.71.  

Neogen’s Segments in Detail

The company's Food Safety segment registered revenues of $165.6 million in the fiscal second quarter, up 0.8% year over year. This consisted of 4.1% core revenue growth, a negative 4.6% impact of divestitures and discontinued product lines and a positive foreign currency impact of 1.3%. Our model projected Food Safety revenues to be $142.9 million for the fiscal second quarter.

Neogen Corporation Price, Consensus and EPS Surprise

Neogen Corporation price-consensus-eps-surprise-chart | Neogen Corporation Quote

Revenues from the Animal Safety segment totaled $59.1 million, down 11.8% year over year. This consisted of a 0.1% core revenue increase, an unfavorable 0.2% foreign currency impact and a negative 11.7% impact of divestitures and discontinued product lines. Our model’s projection for the business was $66.7 million.

On a global basis, the core revenue growth in Neogen’s Genomics business was in the mid-single-digit range in the second quarter.

Neogen’s Margin Details

In the second quarter of fiscal 2026, gross profit declined 5.9% year over year to 106.7 million. The cost of revenues edged up 0.1% to $118 million. The gross margin contracted 153 basis points (bps) year over year to 47.5%.

Sales and marketing expenses amounted to $42.3 million, down 9.1% year over year, whereas administrative expenses increased 12.9% from the prior-year quarter’s level to $65 million. R&D expenses totaled $4.5 million, down 10.7% year over year. The quarter recorded an operating loss of $5.4 million compared to an operating profit of $3.9 million in the year-ago period.  

Neogen’s Q2 Cash Position

Neogen’s cash and cash equivalents at the end of the fiscal second quarter totaled $145.3 million compared with $138.9 million at the end of the fiscal first quarter.

The company’s non-current liabilities included a total outstanding debt of $800 million and a committed borrowing capacity of $201.5 million.

Neogen’s Fiscal 2026 Outlook

The company raised projections for fiscal 2026, expecting revenues in the range of $845 million-$855 million (earlier $820 million-$840 million).

Adjusted EBITDA is expected to be roughly $175 million (previously $165 million-$175 million). Capital expenditures are projected to be nearly $50 million.

Our Take on NEOG

Neogen ended the second quarter of fiscal 2026 on a solid note, with both revenues and earnings beating their respective estimates. The performance reflected encouraging early progress with a return to positive core growth across the enterprise, and adjusted EBITDA margins improved sequentially.

Within Food Safety, the strongest core revenue growth was in Indicator Testing and Culture Media, which benefited from higher sales of sample collection products and Petrifilm. The Biosecurity product category in Animal Safety benefited from strong growth in sales of insect control products. In addition, the upbeat revised guidance for the full year is also encouraging.

NEOG’s Zacks Rank and Key Picks

Neogen currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks from the broader medical space are Medtronic MDT, Fresenius Medical Care FMS and Prestige Consumer Healthcare PBH.

Medtronic, currently carrying a Zacks Rank #2 (Buy), reported second-quarter fiscal 2026 adjusted EPS of $1.36, topping the Zacks Consensus Estimate by 3.82%. Revenues of $8.96 million beat the Zacks Consensus Estimate by 1.11%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

MDT’s earnings yield of 5.8% favorably compares with the industry’s 2.8% yield. The company surpassed earnings estimates in each of the trailing four quarters, with the average surprise being 2.75%.

Fresenius Medical Care, carrying a Zacks Rank #2 at present, posted third-quarter 2025 adjusted EPS of 64 cents, exceeding the Zacks Consensus Estimate by 8.47%. Revenues of $5.71 billion surpassed the Zacks Consensus Estimate by 4.3%.

FMS has an earnings yield of 10.7% compared with the industry’s 0.5% yield. The company’s earnings outpaced estimates in each of the trailing four quarters, with the average surprise being 7.8%.

Prestige Consumer Healthcare, carrying a Zacks Rank #2, reported a second-quarter fiscal 2026 EPS of $1.07, which surpassed the Zacks Consensus Estimate by 10.3%. Revenues of $274.1 topped the Zacks Consensus Estimate by 6.9%.

PBH has an earnings yield of 7.1% compared with the industry’s 2.8% yield. The company’s earnings outperformed estimates in three of the trailing four quarters and missed on one occasion, with the average surprise being 2.8%.

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This article originally published on Zacks Investment Research (zacks.com).

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