NEOG

Neogen ($NEOG) Executives Buy 85,000+ Shares After 68% Stock Plunge; $130M Business Divestiture Signals Core Focus Strategy

04/25/2025 00:45

As Neogen Corp ($NEOG) shares hit historic lows in April 2025, the company's top executives and board members have stepped up with substantial stock purchases, demonstrating strong confidence in the company's future despite recent challenges. Neogen's stock has plummeted approximately 68% over the past six months, bottoming at $4.39 in mid-April. The decline accelerated dramatically following the April 9th release of disappointing fiscal 2025 third-quarter results, when shares dropped 29% in a single day. For the quarter, the company reported adjusted earnings per share of $0.10, below both the previous year's $0.12 and analyst expectations of $0.11. Revenue declined 3.4% to $220.98 million, missing forecasts of $224.88 million, while the company posted a quarterly loss of $10.96 million. What's particularly noteworthy is the pattern of insider buying that has emerged as the stock has fallen. CEO John Adent had already purchased 14,500 shares at $13.80 in October 2024, followed by another 23,035 shares at $11.03 in January 2025. CFO David Naemura likewise acquired 14,800 shares at $11.11 in January. However, the most striking insider activity occurred after the April earnings report sent the stock into freefall. Beginning with CAO John Moylan's purchase of 10,000 shares at $5.07 on April 10th, a wave of insider buying followed. Between April 22nd and 24th alone, four board members and the company's Chief Legal Officer collectively acquired 85,686 shares worth approximately $415,000 in just three days. Director James Borel made the largest single purchase of 35,000 shares (approximately $171,290) on April 24th, while Director Jeffrey Capello acquired 20,712 shares (around $100,217). Director James Tobin, who had previously purchased 3,000 shares at $16.86 in August 2024, demonstrated increased conviction by acquiring 10,000 shares at $4.73—a much more aggressive position at the lower price point. This insider buying activity coincides with significant strategic changes recently announced by Neogen. On April 7th, the company refinanced $550 million of its term loan, and more importantly, on April 21st, announced the sale of its global cleaners and disinfectants business to Kersia Group for $130 million. The proceeds from this sale are earmarked primarily to repay a $100 million credit facility. Neogen, which specializes in food safety and animal health, will now be able to focus more intently on its core businesses following this divestiture. The company's financial health shows a debt-to-equity ratio of 33.61%, indicating moderate leverage, though its current ratio of 3.91 suggests strong short-term liquidity. Food safety industry analysts view these moves as crucial steps toward improving profitability. "Neogen's strategy of divesting non-core assets and focusing on its core competencies could drive margin expansion over the long term. The significant share purchases by executives and board members signal strong internal confidence in this strategy," says Michael Johnson, analyst at food safety consulting firm FSA. From an investor perspective, insider transactions often provide important signals about a company's future outlook. The cluster buying involving C-level executives—including the CEO, CFO, and CLO—sends an especially powerful message. However, Neogen's growth outlook remains challenging. Analysts project average annual revenue growth of just 2.5% over the next three years, below the medical equipment industry average of 7.8%. Nevertheless, the stock showed signs of stabilization following the April 21st announcement of the cleaners and disinfectants business sale, temporarily rebounding 8.3%, and climbing to $5.20 by April 24th as news of insider buying spread. This suggests the market is responding positively to Neogen's strategic shifts and insider confidence. Neogen's future performance will depend on innovation and efficiency improvements in its core food safety and animal health segments. The substantial stock purchases by company leadership demonstrate strong internal conviction that the company can overcome its current challenges and return to a growth trajectory. However, investors should remain cautious, keeping an eye on the company's modest growth outlook and competitive industry landscape.

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