2024-04-14 22:37:27 ET
Summary
- Neogen's acquisition of 3M's food safety operations has done far more harm than good in the short term, as integration issues have undermined financial performance and credibility with investors.
- The company's disappointing FQ3'24 results and ongoing operating inefficiencies have led to another cut in guidance for revenue and EBITDA, and the shares are near a 52-week low.
- These integration challenges won't go on forever, and Neogen will emerge as a larger, stronger player in the global food safety market.
- I believe Neogen's shares should trade in the mid-teens, with further upside tied to a reversal of these disappointing revenue and margin trends, but rebuilding investor trust is key.
Growth through acquisitions has long been key to the Neogen (NEOG) growth story, but the key to such a strategy is efficiently integrating those deals and the bigger the deal, the more crucial execution becomes. So far, the integration process of Neogen's acquisition of 3M 's (MMM) food safety operations can best be described in language that isn't really printable here, and that is having a major negative impact on both the company's financial performance and its credibility with the Street....
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Battered By M&A Integration Issues, Neogen Has To Rebuild Investor Trust