NEOG

Neogen ($NEOG) Executives Signal Confidence Through Cluster Buying Amid Sharp Stock Decline

04/24/2025 02:21

Amid a sharp decline in the stock price of Neogen Corp ($NEOG), a U.S. food safety and animal health solutions provider, company executives and board members have been aggressively purchasing shares, drawing significant attention from investors. The substantial insider buying over the past two weeks is being interpreted as a strong vote of confidence in the company's long-term value from those who know it best. Shares of $NEOG plummeted approximately 28.7% from $7.04 on April 8, 2025, to $5.02 on April 9, before sliding further to $4.39 by April 17. This precipitous drop was closely tied to the disappointing fiscal year 2025 third-quarter results announced on April 9. Neogen reported adjusted earnings per share (EPS) of $0.10, down from $0.12 in the same period last year, while revenue decreased by 3.4% to $220.98 million. However, in the wake of this stock collapse, a wave of insider buying has emerged. Chief Accounting Officer (CAO) John Patrick Moylan initiated the buying spree on April 10 with a purchase of 10,000 shares at an average price of $5.07 (approximately $50,700). More noteworthy is the cluster buying that occurred on April 22-23. During this two-day period, Director Rafael Rodriguez acquired 7,474 shares at $4.59, Director James Tobin purchased 10,000 shares at $4.73, and Director Jeffrey Capello bought 20,712 shares at $4.84. The following day, Chief Legal Officer (CLO) Amy Rocklin added 12,500 shares at an average price of $4.99. This concentrated buying activity extends a pattern of consistent insider purchases over recent months. CEO John Edward Adent acquired 14,500 shares at $13.80 (about $200,100) on October 11, 2024, and added another 23,035 shares at $11.03 (approximately $254,076) on January 16, 2025. On the same day, CFO David H. Naemura purchased 14,800 shares at $11.11 (about $164,428). This pattern of insider buying suggests that, despite current challenges, the management team maintains strong confidence in Neogen's long-term value and recovery potential. Neogen has been undergoing significant strategic changes amid financial difficulties. On April 21, the company announced the sale of its global cleaners and disinfectants business to France's Kersia Group for $130 million. This transaction is expected to close in the first quarter of 2026, with proceeds designated to repay a $100 million credit facility. Financially, Neogen reported a net loss of approximately $10.96 million for the third quarter, significantly worse than the $2 million loss in the prior-year period. However, the company still maintains about $127.7 million in cash and a healthy current ratio of 3.91, suggesting no immediate liquidity concerns. Both the Food Safety segment (revenue of $152.7 million, down 3.2% year-over-year) and the Animal Safety segment (revenue of $68.2 million, down 4% year-over-year) experienced declining sales, but the company is restructuring to focus on its core operations. In announcing the cleaners and disinfectants unit sale, CEO John Adent stated that the divestiture "allows Neogen to focus more on food safety diagnostics." Historically, concentrated insider buying often signals a potential bottom in share prices. The fact that insiders across various positions, from the CEO and CFO to board members, are investing their own capital demonstrates belief in the company's fundamental value. Neogen currently trades at just 0.40 times book value, suggesting it may be undervalued from an asset perspective. However, investors should clearly recognize the challenges Neogen faces, including recent underperformance and declining revenue trends. Analysts project Neogen's revenue to grow at a modest annual rate of 2.5% over the next three years, below the Medical Equipment industry average of 7.8%. Whether the insider buying cluster marks a turning point for the company or simply represents optimistic judgment remains to be seen. However, the intensity of conviction demonstrated by Neogen insiders over the past few weeks is certainly enough to warrant market attention.

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