Neogen delivered a stronger-than-expected quarter and raised its fiscal-year outlook, but some of its strong growth may prove difficult to repeat.
The company posted first-quarter revenue of $222.8 million and adjusted earnings of 8 cents a share on Tuesday, exceeding consensus calls of $208.2 million and 5 cents, respectively, according to FactSet.
It separately raised its revenue guidance for fiscal 2027 to between $885 million and $890 million, up from prior projections of between $880 million and $885 million. Wall Street's estimate was $883.2 million as of Tuesday.
Neogen is a food- and animal-safety company that manufactures tests and other products to detect bacteria, allergens and other potential hazards. The company is known for its Petrifilm testing plates, which food producers use to detect and measure bacteria and other microorganisms.
Its headline growth rate may have overstated the pace of underlying demand.
About 3 percentage points of the company's 8.1% core revenue growth came from favorable year-over-year comparisons and the timing of customer orders, Guggenheim analysts wrote Wednesday.
In an earnings call, Neogen management said core growth is expected to slow to roughly 3.5% through the first half of fiscal 2027, with the second quarter likely to have the "lowest level of core growth for the year," according to Guggenheim.
William Blair analysts were more bullish on Neogen's growth in a note on Wednesday, writing the company's revenue and adjusted earnings still topped their estimates "even when backing out" the 3 percentage points.
The projected first-half core growth of 3.5% is a "better proxy for underlying momentum," and the outlook remains "largely a positive update" that points to continued commercial momentum, William Blair analysts said.
Guggenheim and William Blair both held a Buy rating for Neogen shares and a $14 price target, representing 17% upside from the stock's closing price of $11.96 on Tuesday. Of the four analysts polled by FactSet, three are a Buy, and one is a Hold.
Neogen shares fell 2.4% to $11.67 on Wednesday. The stock is up 73% this year, on pace for its best annual performance since 2010, according to Dow Jones Market Data. Thermo Fisher Scientific rose 0.3%, and IDEXX Laboratories dropped 2%.