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Neogen - AI Stock Analysis

Analysis generated January 9, 2025

Neogen Corporation specializes in the development and marketing of products dedicated to food and animal safety. The company’s offerings are bifurcated into two primary categories: Food Safety and Animal Safety. Neogen's Food Safety division provides diagnostic test kits and other products to detect foodborne pathogens, natural toxins, genetic modifications, food allergens, drug and chemical residues, pesticides, ruminant byproducts, and other contaminants. Meanwhile, the Animal Safety division offers a broad range of veterinary instruments, pharmaceuticals, vaccines, topicals, and diagnostic products to the worldwide animal safety market.

With a rich history that spans over three decades, Neogen has continually innovated and expanded its product lines. However, recent data presents some concerning trends that warrant a closer examination.

Fundamental Analysis

Neogen's revenue for the last quarter was $434 million, marking a decrease of 2.97% compared to the previous quarter. More troubling is the year-over-year comparison, showing a decrease of 7.92%. These indicators suggest potential challenges in maintaining or growing their market share or customer base.

Net income for the last quarter stands at $13 million, which represents a massive decline of 523.59% compared to the previous quarter. This dramatic decrease could signal significant issues in operational efficiency or unforeseen expenses. Compared to the same quarter last year, there is a decrease of 326.29%, further exacerbating concerns about the company's current fiscal health.

Interestingly, EBITDA for the last quarter was $33 million, an increase of 15.60% from the previous quarter. While this is a positive sign, the year-over-year comparison shows a reduction of 19.18%, indicating that the company might still be struggling with its overall profitability.

The current Price-to-Earnings (P/E) ratio stands at 865, which is highly elevated and potentially indicative of overvaluation. High P/E ratios can signify a bullish outlook from investors, but they also highlight the risk of a stock price correction.

Technical Analysis

Neogen's stock price today is $13.07, reflecting a slight decrease of 0.31% compared to a month ago. While marginal in the short term, the stock has seen a year-over-year decline of 30.29%, which may alarm long-term investors.

On the bullish side, the trend is positive, with the current Simple Moving Average (SMA10) at 12.48, slightly higher than the previous SMA10 of 12.41. This suggests potential upward movement in price. Additionally, the Relative Strength Index (RSI) is 5.3, indicating an oversold condition and a potential buyer's opportunity.

Alternative Data Analysis

Job postings at Neogen have decreased by 30% over the past couple of months, a red flag for a company focused on growth. Employee sentiment is equally concerning, with only 45% of employees having a positive outlook on the company's future—a drop of 6% in recent months.

Customer acquisition metrics also paint a worrying picture: Neogen's website has seen a 9% decline in visitors, a possible indicator of waning customer interest. Meanwhile, customer engagement metrics show mixed results: while Instagram followers have increased by 4%, Twitter followers have decreased by 1%.

The AltIndex AI score for Neogen is 40, signaling a bearish outlook and a sell recommendation based on an integration of fundamental, technical, and alternative data.

Conclusion and Recommendation

Neogen exhibits several areas of concern across fundamental, technical, and alternative data metrics. Revenues and net income are declining, and while there is some positive momentum in EBITDA and technical indicators, the overall picture is mixed. High P/E ratios indicate a probable overvaluation, and decreasing job openings along with declining web traffic suggest potential long-term issues.

Given the current data, caution is advised. The overall sentiment, as synthesized by the AltIndex AI score, leans towards a sell recommendation. Investors might consider waiting for more consistent signs of recovery before committing to or continuing with Neogen stock.

Disclaimer: This AI stock analysis, generated by an experimental AI tool, is for informational purposes only and not financial advice. Information is based on publicly available data and may not always be accurate or current.