Investopedia: Neogen's Valuation Defies Gravity

While investors are often willing to pay high premiums for above-average growth, many companies see significant underperformance in their stock when they transition to a slower growth profile. That has not yet happened at Neogen (Nasdaq:NEOG). While it may indeed be premature to say that this food safety and animal health company is past its days of double-digit organic growth, the expectations that the Street has baked into this valuation seems difficult to justify.

A Sluggish Quarter, as Expected
To its credit, management didn't serve up any particular negative surprises this quarter. Revenue growth was sluggish at 6.3%, but broadly in line with expectations. Although there were some solid individual performances this quarter (veterinary products up about 30% and animal care up around 40%), it looked more as though the company saw a lot of individual items compress the growth - from de-stocking in Europe to tougher comps from vomitoxin sales last year and so on.

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