Neogen is no longer the broken integration story that produced a large goodwill write-down a year ago. Food Safety core growth re-accelerated in the May quarter to the fastest pace since the 3M combination, and a new chief executive is restacking the commercial model around fewer customers and fewer product lines. The stock has already more than doubled from last autumn's lows. The remaining debate is whether the Petrifilm manufacturing move off 3M and the pending genomics sale to Zoetis convert that cleanup into lasting margin and a smaller coupon, or whether fiscal 2027 investment and a still-heavy capital structure leave the equity priced for a handoff that has not yet shipped a full product mix.
The May quarter showed the first clean evidence that demand, not just cost cutting, is starting to cooperate. Food Safety core growth reached nearly six percent, led by indicator testing and sanitation kits rather than one-off channel fills. Animal Safety returned to slightly positive core growth after a supply-starved winter and rose sequentially once vitamin and manufacturing shortages eased. Full-year sales still declined because of the Cleaners and Disinfectants exit and a weak animal franchise, and adjusted earnings before interest, taxes, depreciation, and amortization actually slipped versus the prior year. That gap between a better fourth quarter and a still-soft year is the tension the market is choosing to look through.
The next twelve months resolve three named variables. First, whether the Lansing plant can make sellable Petrifilm at volume after the November manufacturing transition begins. Second, whether Food Safety core growth holds in the mid-single digits once comparisons get harder. Third, whether Australian and New Zealand antitrust reviews allow the Zoetis genomics sale to close with roughly $140 million of net proceeds earmarked for debt. Management's fiscal 2027 guide embeds only about three percent core growth and almost no margin expansion because research spending is slated to rise by half. Does the current multiple already assume the plant works?