Neogen Corporation (NEOG): what the price assumes
In the published model solve dated 2026-Q2, anchored at $11.39, Neogen Corporation (NEOG) is priced for +8.3% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-27.
Generated: 2026-08-10 · Exported: 2026-08-12 · Source: https://boothcheck.com/report/NEOG
Headline
| Field | Value |
|---|---|
| Ticker | NEOG |
| Company | Neogen Corporation |
| Current price | $11.39/sh |
| Composition | Food Safety: Natural Toxins & Allergens 9% / Food Safety: Bacterial & General Sanitation 18% / Food Safety: Indicator Testing, Culture Media & Other 36% / Food Safety: Rodent Control, Insect Control & Disinfectants 5% / Food Safety: Genomics Services 3% / Animal Safety: Life Sciences 1% / Animal Safety: Veterinary Instruments & Disposables 7% / Animal Safety: Animal Care & Other 4% / Animal Safety: Rodent Control, Insect Control & Disinfectants 10% / Animal Safety: Genomics Services 7% |
What The Price Assumes (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin (value-band context) | 8.1% |
| Operating margin (mid-cycle) | 15.8% |
| Margin compression (value-band) | -7.7pp |
| Trailing margin (depressed year) | -2.5% |
| Implied growth | 8.3% |
| Multiple paid | 23x mid-cycle operating income |
The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.
Solve inputs: computed at a 7.6% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~7.9pp.
Reconcile: at the x-ray's 9.3% required return this reads ~20.4%/yr; the models below use their own rates.
How unusual the bet is: within-range (limited comparison data)
| Reference | Value |
|---|---|
| vs own history | +0.25σ |
| implied end-window share | 0% |
Valuation X-Ray
Every valuation family lands below the price. The price therefore sits beyond what those standard frames encode.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.25x | 2 | expensive |
| Earnings | — | 0 | — |
| Relative | — | 0 | — |
| Growth | — | 0 | — |
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.9%); the inversion above states its own rate.
Per-Model Detail (n=2)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $0.00 | — | no | FCF base $0.0B, growth -3% (input: historical growth), terminal g 0.5%, WACC 7.9%, 5yr projection |
| DCF Exit Multiple | Growth | $8.14 | 1.40x | no | Exit EV/EBITDA: 414.6x / 416.6x / 418.6x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | — | — | no | P/S fallback (negative EPS): Sector P/S 4.0x × TTM revenue — excluded from consensus |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $9.62 | 1.18x | yes | Reference only (book value floor): BV/sh $9.62, ROE negative |
| Two-Stage Excess Return | Asset | $8.65 | 1.32x | yes | Reference only (book value with convergence): BV/sh $9.62, ROE converges to ke |
| Discounted Future Market Cap | Growth | $6.57 | 1.73x | no | Rev $0.9B, growth -3% (input: historical growth; tapered), Terminal P/S: 2.4x / 2.8x / 3.3x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $0.00 | — | no | Negative/zero EPS — earnings-based value floored at $0 |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | — | — | no | — |
| Residual Income | Asset | — | — | no | — |
| Graham Number | Asset | — | — | no | — |
| EV/EBITDA Relative | Relative | — | — | no | EBITDA $0.01B × sector EV/EBITDA 16.0x |
| FCF Yield | Earnings | $0.01 | 1139.00x | yes | FCF $31.9M / Kₑ 9.3% — zero-growth perpetuity (excluded from median) |
| SBC-Adj FCF Yield | Earnings | $0.01 | 1139.00x | yes | SBC-adj FCF $0.02B (FCF $0.03B − SBC $0.01B) capitalized at Kₑ (excluded from median) |
| Ben Graham Formula | Earnings | — | — | no | — |
| ROIC-Justified P/B | Asset | $0.11 | 103.55x | yes | BV $9.62 × (ROIC 0.1% / WACC 7.9%) (excluded from median) |
| P/Sales Sector | Relative | — | — | no | Revenue $0.87B × sector P/S 4.0x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | — | — | no | — |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Economic-Unit Decomposition (Sum Of The Parts)
One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.
| Unit | Role | Valuation basis | Revenue | Reported profit | Value evidence | Status |
|---|---|---|---|---|---|---|
| Food Safety | operating | enterprise | $638.1b | — | withheld | unresolved no unit value |
| Animal Safety | operating | enterprise | $256.5b | — | withheld | unresolved no unit value |
No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.
Solvency
| Field | Value |
|---|---|
| Net debt | $614.5m |
| Net debt / NOPAT (after-tax) | 5.64x |
| Net debt / operating income (pre-tax) | 4.46x |
| Share count CAGR (dilution) | 0.2% |
| Burning cash | no |
Leverage and coverage are computed on normalized mid-cycle operating income (mid-cycle margin 15.8%); the trailing year was depressed.
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
Neogen sells food-safety and animal-safety testing products, the kind of business that is normally easy to like because it runs on recurring consumables, but is hard to value right now because it is mid-integration of the large 3M Food Safety (Petrifilm) acquisition. Trailing operating margin is deeply negative on impairment and integration charges, while the through-cycle margin is around 16%.
At $9.30 the stock has been heavily de-rated. On normalized earnings the price pays about 19x mid-cycle operating income, implying roughly 5.5% growth, and the read is value and asset-supported rather than a growth bet.
The balance sheet carries the deal: net debt of about $653 million, which the company is working to reduce, including through a planned divestiture of its genomics business. The thesis turns on whether the Petrifilm transition and integration stabilize margins before the debt becomes a constraint.
Bull Case
Food-safety testing is a deceptively attractive sector to value once you see its shape: the equipment and platforms generate a long tail of recurring consumable sales, so a healthy player earns razor-and-blade economics with high gross margins and sticky customers. Neogen fits that template on the Food Safety side, where the Petrifilm and broader testing portfolio sells repeatable consumables into food producers who cannot afford a contamination failure. The complication, and the opportunity, is that the company is partway through absorbing the 3M Food Safety business, which has depressed reported margins and made the trailing numbers look far worse than the underlying franchise. Strip out the integration noise and the through-cycle margin sits around 16%, which is what the normalized valuation is built on.
The self-help story is concrete and on track. Neogen is moving Petrifilm manufacturing in-house, a transition the company reports remains on schedule for November of fiscal 2027, and it has named that transition along with maintaining gross and operating margins as central to its plan (FY2025 10-K, accession 0000950170-25-100064). Bringing manufacturing in-house removes a major cost inefficiency tied to the acquisition, which is the single biggest lever to restore the margin profile the business is capable of. Management has paired that with R&D and commercial-leadership changes aimed at faster product development.
The deleveraging plan adds an asset-driven catalyst. The company intends to divest its genomics business, with the proceeds earmarked for debt reduction, which both shrinks the net-debt burden and sharpens the portfolio toward the higher-margin food-safety core. With the stock at a depressed $9.30 (June 27, 2026) and the valuation supported by asset-based and relative-multiple frames rather than by optimistic growth, the bull case is a turnaround: a recurring-revenue franchise trading near asset value while management executes a credible margin-and-deleveraging plan. If the Petrifilm transition lands and Food Safety keeps growing, the normalized earnings power is well above what the current price reflects.
Bear Case
The advantage that should make Neogen durable is showing signs of erosion, and the data is in the segment results. In the most recent quarter Food Safety grew only 2.6% while Animal Safety revenue fell 20.1%, and the company posted a net loss with adjusted EPS of just $0.09. A 20% decline in an entire segment is not integration noise, it is demand and competitive pressure eating into a business that is supposed to be steady, and it suggests the moat in parts of the portfolio is thinner than the recurring-consumables story implies. When one half of the company is barely growing and the other is contracting double digits, the through-cycle margin the valuation relies on is itself in question.
The integration that is meant to fix margins is also the source of risk. Folding in the 3M Food Safety business has weighed on profitability for an extended period, and the Petrifilm in-house manufacturing transition, while reportedly on track, is a complex operational undertaking that does not complete until late fiscal 2027. Until then the cost inefficiencies persist, and any slip in the transition timeline pushes the margin recovery further out. The filing itself lists the Petrifilm transition and the ability to maintain gross and operating margins among the conditions the business must satisfy (FY2025 10-K, accession 0000950170-25-100064), which is the company acknowledging these are open questions, not settled facts.
The balance sheet narrows the margin for error. Net debt of about $653 million against a business currently generating negative trailing operating income means the deleveraging plan, including the genomics divestiture, has to deliver. If the divestiture proceeds disappoint or the margin recovery lags, the debt becomes a heavier constraint just as the cyclical and competitive pressures bite. The bear case is that this is a value-and-asset-supported name precisely because the operating story is broken: cheap because of what is deteriorating, with the turnaround dependent on a multi-year integration going right while at least one segment shrinks.
Valuation
Valuing Neogen requires normalizing past the cycle, because trailing operating profit is deeply negative on integration and impairment charges and does not reflect the underlying business. On the company's through-cycle margins applied to current revenue, the price pays about 19x mid-cycle operating income, which implies operating growth of roughly 5.5% per year over a five-year stage. That solve runs at a cost of capital near 7.8% with 4% terminal growth, and each point of cost of capital moves the implied growth by about 7.3 points. Treat these as directional, the normalization assumption is doing a lot of the work.
The family pattern is thin but supportive. With trailing earnings negative, the earnings-power and growth families cannot be computed cleanly, and the price rests on the asset-based and relative-multiple methods, both of which support or sit near the current quote. The reverse-DCF range centers well above the current price with an acceptable reliability flag, which says that if the normalized margins are real, the stock is cheap. The catch is the word if.
The judgment is a turnaround call. The implied 5.5% growth is modest and within reach for a recurring-revenue testing business, so the assumption is not the issue. The issue is whether the 16% through-cycle margin is recoverable given the integration drag and the 20% decline in Animal Safety. If the Petrifilm transition and deleveraging restore the normalized margin, the asset-supported valuation makes the stock attractive at $9.30; if the operating deterioration proves structural rather than cyclical, the normalized earnings the valuation assumes never materialize, and the cheapness is illusory.
Catalysts
The most recent print, fiscal Q3 2026, showed revenue of $211.2 million, with Food Safety up 2.6% and Animal Safety down 20.1%, a net loss of $17.0 million, and adjusted EPS of $0.09. The segment divergence, modest Food Safety growth offset by a sharp Animal Safety decline, is the core operating tension.
The defining catalyst is the Petrifilm manufacturing transition, which the company reports remains on track to move in-house in November of fiscal 2027, with operational and performance validation underway. Completing that shift is the largest single lever to remove integration-related cost inefficiencies and restore margins. The planned divestiture of the genomics business is the other concrete catalyst, expected to provide cash for debt reduction and to sharpen the portfolio toward the higher-margin food-safety core.
The watch items are the Animal Safety trajectory, Food Safety growth momentum, the Petrifilm transition timeline, and progress on deleveraging via the genomics sale. A stabilization in Animal Safety alongside on-schedule Petrifilm execution and debt reduction would support the turnaround thesis; continued segment declines or a transition slip would deepen the concern that the deterioration is structural. Sources: Neogen fiscal 2026 results and strategic updates (investors.neogen.com; businesswire.com; investing.com; simplywall.st), 2026.
Peer Cohorts (Per Segment, With Filing Citations)
Food Safety (reported)
- TECH (BIO-TECHNE Corp)
- FY2025 10-K: …in the United States and/or other countries. Solely for convenience, we may refer to trademarks in this Annual Report on Form 10-K without the ™ or ® symbols. Such references are not intended to indicate that we will not assert our full rights to our trademarks. LAWS AND REGULATIONS Our operations, and some of the…
- FY2025 10-K: …to pervasive and continuing regulation by the FDA and certain state and non-U.S. agencies. As a medical device manufacturer, our manufacturing facilities are subject to inspection on a routine basis by the FDA. We are required to adhere to the Current Good Manufacturing Practices ("cGMP") requirements, as set forth…
- QGEN (QIAGEN N.V.)
- FY2025 20-F: …became effective on July 5, 2024 and was expected to begin entering into force against non-exempt "LDT manufacturers" in May 2025. Following issuance of the LDT final rule, the American Clinical Laboratory Association (ACLA) and one of its members, as well as the Association for Molecular Pathology (AMP) and one of…
- FY2025 20-F: …use LDTs. However, laboratories can lawfully use QIAGEN's products, such as those for non-clinical applications, IVDs, enzymes, or oligos, to create their own LDT workflows. Medical devices, including IVDs, are classified into one of three classes depending on the controls deemed by the FDA to be necessary to…
- BRKR (BRUKER CORPORATION)
- FY2025 10-K: …range of sampling accessories and techniques, which include, among others, microanalysis and high-throughput screening to help users find suitable solutions to analyze their samples effectively. Customers of our BSI CALID Segment include pharmaceutical, biotechnology and diagnostics companies, contract research…
- FY2025 10-K: …in obtaining required FDA clearances or approvals or foreign equivalents; seizures or recalls of our products or those of our customers; or the inability to sell such products. Any such FDA or comparable foreign regulatory actions could disrupt our business and operations, lead to significant remedial costs and have…
- MRVI (Maravai LifeSciences Holdings, Inc.)
- FY2025 10-K: …clinical trial vaccines and vaccine support products. We produce materials in support of our customers' manufacturing businesses and to fulfill their validation requirements, as applicable. These customer activities are subject to extensive regulation by FDA and other national regulatory agencies and consequently…
- FY2025 10-K: …protection, competition laws, may be interpreted in ways that would limit our ability to use AI technologies for our business, or require us 19 Table of Contents to change the way we use AI technologies in a manner that negatively affects the performance of our offerings, services, and business and requires us to…
Animal Safety (reported)
- ZTS (Zoetis Inc.)
- FY2025 10-K: …for 45% of our total revenue for the year ended December 31, 2025. Our international businesses are subject, in varying degrees, to a number of risks inherent in carrying on business in other countries. These include, among other things, currency fluctuations, capital and exchange control regulations, expropriation…
- FY2025 10-K: …surgeries Dogs Solensia ® An injectable monthly antibody therapy to alleviate osteoarthritis pain in cats Cats Dermatology Apoquel ® / Apoquel ® Chewable A selective inhibitor of the Janus Kinase 1 enzyme that controls pruritus associated with allergic dermatitis and control of atopic dermatitis in dogs at least 12…
- ELAN (Elanco Animal Health Incorporated)
- FY2025 10-K: …on animal-derived protein, reduced herd or flock sizes or reduced demand for animal-derived protein, any of which may have a material adverse effect on our business, financial condition and results of operations. Our R&D relies on evaluations of animals and may become subject to bans, additional restrictive…
- FY2025 10-K: …Cats, Dogs Zenrelia™ JAK inhibitor in the form of a once-daily oral tablet targeting control of pruritus and atopic dermatitis in dogs. Dogs Farm Animal Products Product Description Primary Species AviPro™ (vaccines) Includes multiple products that collectively protect against Newcastle disease, infectious…
- IDXX (IDEXX LABORATORIES INC /DE)
- FY2025 10-K: , and Livestock, Poultry and Dairy. Our Other operating segment combines and presents our human medical diagnostic products business with our out-licensing arrangement because they do not meet the quantitative or qualitative thresholds for reportable segments. Companion Animal Group ("CAG") - Diagnostic and…
- FY2025 10-K: …our competition, refer to "Part I, Item 1A. Risk Factors." Competitive factors in our different business areas are detailed below: • Companion animal diagnostic offerings . We compete primarily on the basis of ease of use and speed of our products, diagnostic accuracy, product quality, breadth of our product line and…
- PAHC (Phibro Animal Health Corporation)
- FY2025 10-K: …veterinarians and consumers who raise and care for farm and companion animals by providing solutions to help them maintain and enhance the health of their animals. We market approximately 800 product lines in approximately 90 countries to approximately 4,500 customers. We develop, manufacture and market a broad range…
- FY2025 10-K: …percentages may reflect rounding adjustments. Animal Health Our Animal Health business develops, manufactures and markets about 340 product lines, including: ● Antibacterials, which inhibit the growth of pathogenic bacteria that cause infections in animals; anticoccidials, which inhibit the growth of coccidia…
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.