Neogen Corp. (NEOG) shares fell 9.1% in premarket trading after the company reported a 4.4% drop in fiscal third-quarter revenue, even while beating earnings estimates and raising its full-year outlook.
The decline was largely driven by a 20% drop in animal safety revenue, which the company attributed to “third-party, supply-based setbacks.” Neogen is “actively engaged in improving” these challenges, CEO Mike Nassif said.
The food and animal safety company posted an adjusted profit of 9 cents a share, topping analyst calls for 6 cents. However, its net loss widened to $17 million from $10.9 million in the same period a year ago.
The negative stock reaction despite the raised guidance suggests investors are focused on the severe operational issues in the core animal safety division. The company now targets $857 million to $860 million in full-year revenue, above the $850.6 million analysts were projecting.
Strength in Neogen's food safety segment, where revenue grew 2.6%, was not enough to offset the sharp decline in its animal safety business. The company's performance highlights the significant impact of supply chain disruptions on its operations, a key concern for investors. The S&P 500, for comparison, was indicating a much smaller decline, with futures down 0.3% in the same premarket session.
The guidance increase implies management is confident that the food safety segment's momentum will continue and that it can manage the animal safety segment's challenges. Investors will be closely watching for updates on the resolution of the supply setbacks in the upcoming quarters.
This article is for informational purposes only and does not constitute investment advice.
