NEOG

Neogen ($NEOG) Executives and Directors Snap Up $650,000 in Shares Amid 70% Stock Plunge

04/29/2025 10:37

As Neogen ($NEOG) shares have plummeted in early 2025, company executives and board members have stepped up with significant insider purchases, demonstrating strong confidence in the company's future. Over the past two weeks, insiders have acquired more than 110,000 shares worth approximately $650,000. On April 24-25, Neogen director James Borel purchased a total of 65,000 shares for about $320,000 over two days. Borel, a former DuPont executive vice president, brings over 35 years of experience in the agricultural sector. During the same period, fellow board members Jeffrey Capello acquired 20,712 shares, Rafael Rodriguez purchased 7,474 shares, and Catherine Woteki bought 5,770 shares. Executive leadership has also participated actively in this buying spree. Chief Legal Officer (CLO) Amy Rocklin acquired 12,500 shares at $4.99 on April 23, while Chief Accounting Officer (CAO) John Patrick Moylan purchased 10,000 shares at $5.07 on April 10. These moves follow earlier purchases by CEO John Edward Adent, who bought 23,035 shares for approximately $250,000 in January, and CFO David Naemura, who acquired 14,800 shares for over $160,000 on January 16. This cluster of insider buying comes after Neogen's stock has suffered a severe decline. The shares traded above $17 in July 2024 but have plunged below $5 by mid-April 2025. Particularly notable was the nearly 30% single-day drop following the company's worse-than-expected earnings report on April 9. Neogen develops and manufactures diagnostic test kits and related products for food safety and animal health. Founded in 1981, the company operates through two primary segments: Food Safety and Animal Safety. The Food Safety segment provides diagnostic test kits for detecting harmful substances in food and animal feed, while the Animal Safety segment offers veterinary instruments, pharmaceuticals, vaccines, and diagnostic products for animal health. Looking at recent business developments, Neogen reported adjusted earnings of 10 cents per share in its Q3 fiscal 2025 results announced on April 9. This represents a decline from 12 cents in the same period last year and fell short of analyst expectations of 11 cents. Revenue decreased by 3.4% to $220.98 million, with a quarterly loss of $10.96 million. Significantly, Neogen is undergoing business restructuring. On April 21, the company announced the sale of its global cleaners and disinfectants business to France's Kersia Group for $130 million. The transaction is expected to close in Q1 2026, with proceeds earmarked to repay a $100 million credit facility. Following this announcement, Neogen's shares rose 8.3% to $4.75. Additionally, on April 7, the company announced the refinancing of $550 million principal of its original $650 million term loan due in August 2027, as well as its revolving credit facility. The new $450 million term loan and $250 million revolving credit facility will mature in 2030. Examining Neogen's financial health, the company currently carries total debt of $894.26 million, representing approximately 30.7% of its total assets of $4.55 billion. Cash holdings stand at $127.7 million, with a healthy current ratio of 3.91 indicating good short-term liquidity. However, the company has reported a net loss of $485.26 million over the trailing twelve months, representing a profit margin of -53.56%. The average analyst rating for Neogen remains 'buy,' with a median 12-month price target of $15.00, suggesting significant upside potential from current levels. However, projected revenue growth for the next three years is modest at 2.5% annually, considerably lower than the medical equipment industry's forecasted growth rate of 7.8%. From a valuation perspective, Neogen's current price-to-earnings (P/E) ratio is extremely high at 822.50 due to negative earnings, though its forward P/E of 16.00 appears more reasonable. The price-to-sales (P/S) ratio stands at 1.23, while the price-to-book (P/B) ratio is relatively low at 0.42. The substantial insider buying suggests management's conviction that the stock is significantly undervalued. The cluster buying pattern involving key executives (CEO, CFO, CLO, CAO) alongside multiple directors sends a particularly strong signal of confidence. Nevertheless, investors should consider the financial challenges and competitive pressures facing Neogen. While recent poor performance and business divestitures demonstrate efforts to focus on core operations and improve margins, the successful execution of these strategic changes remains to be seen. Neogen's current situation presents short-term challenges, but the strong insider buying signals and business restructuring efforts could yield positive outcomes over the longer term. Investors would do well to monitor upcoming quarterly results and progress in the company's business transformation.

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