Neogen Expands In South America With Productos Acquisition

Neogen Corporation (NASDAQ:NEOG) announced that it acquired its food safety diagnostics distributor, Productos Quimicos Magiar (Magiar), which has network in Argentina and Uruguay. Notably, Neogen has been conducting business with Magiar for the past 20 years.

The former Magiar operations will, henceforth, be managed by Neogen’s Latin American operations, and will offer direct sales of Neogen food safety, animal safety and genomic products into Argentina and Uruguay. However, financial terms of the deal have been kept under wraps.

With the recent buyout, Neogen aims to recapture distributor profits as well as have a direct sales and technical service presence for its full suite of products in the Southern (NYSE:SO) Cone. The company is looking forward to strengthen its food safety business globally through such moves.

Rationale Behind the Buyout

With the recent buyout, Neogen will be able to establish its physical presence in the two countries where it can tap into the huge beef and dairy population. These regions will also provide the company with considerable export opportunities.

Per Neogen’s management, key personnel have been retained to ensure the same level of service to customers and consistency is maintained.

Industry Prospects

Per a report by Grand View Research, the global food safety testing market size was approximated at $18 billion in 2018, witnessing a CAGR of 7.7% between 2019 and 2025. Increasing incidents of food contamination due to rising demand for packaged and processed food is likely to drive the market.

Given the rising potential of the market, the buyout has been well-timed.

Recent Developments

Lately, Neogen witnessed a number of crucial developments, pertaining to the Food Safety segment.

In December, the company announced the receipt of approval from the AOAC Research Institute for its Soleris for Enterobacteriaceae (EBAC) test, which has been designed for the prevention of bacterial contamination of food, pet food, nutraceutical, pharmaceutical and cosmetic products.

Further, it announced the launch of the Reveal Q+ MAX test in December to check for ergot alkaloids infection in rye and wheat. The test, which is the first one for ergot alkaloids in the simple rapid lateral flow format, is compatible to be used with Neogen's Raptor testing platform.

In November, the AOAC Research Institute approved the company’s Reveal 3-D for Peanut test to help prevent peanut residues from contaminating foods intended to be peanut-free.

Neogen, in October, launched K-Gold Plus, a p-nitrophenyl phosphate (PNPP) substrate, combining the ease of use of its previous PNPP substrate with improved signal-to-background performance.

Price Performance

Shares of Neogen have gained 11.6% in the past year compared with the industry’s 19.1% growth.

Zacks Rank & Stocks to Consider

Currently, Neogen carries a Zacks Rank #4 (Sell).

Some better-ranked stocks from the broader medical space are Haemonetics Corporation (NYSE:HAE) , Medtronic plc (NYSE:MDT) and Vapotherm, Inc (NYSE:VAPO) .

Haemonetics, currently flaunting a Zacks Rank #1 (Strong Buy), has a projected long-term earnings growth rate of 13.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Medtronic’s long-term earnings growth rate is estimated at 7.4%. The company currently carries a Zacks Rank #2 (Buy).

Vapotherm’s long-term earnings growth rate is estimated at 49.5%. It currently carries a Zacks Rank #2.

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