Neogen Gets AOAC Validation for NeoSeek to Ensure Food Safety

Zacks Equity Research

Neogen Corporation NEOG recently confirmed receiving validation for its NeoSeek genetic testing service, to be used for its STEC proprietary testing platform. This test identifies seven Shiga toxin-producing strains of E. coli (STEC) in a food sample, which causes severe illnesses in humans.

The approval marks a major development for Neogen’s food safety business.

Details on NeoSeek

NeoSeek examines 89 independent gene targets to detect and identify pathogens and provide results directly from the enrichment broth, eliminating the need for single colony isolation and delivering results much sooner than conventional cultural methods.

The validation for NeoSeek was jointly sought by Neogen and Meat & Livestock Australia Limited (MLA), which delivers marketing and development services, for Australia's cattle, sheep and goat producers. Going forward, Neogen will not only offer 24-hour testing service at its animal genomics headquarters in Lincoln, Nebraska but also at its genomics laboratory in Gatton, Australia.



Significance of the Approval

The approval from Association of Official Analytical Chemists (AOAC) clears NeoSeek for detecting and identifying the genetic composition of food samples by all countries and companies with export relations with the United States and need to meet U.S. import guidelines. This will make it possible for slaughterhouses and other producers to screen their samples with a method that has a greater specificity or accuracy than other testing methods currently available.

The company expects to fortify its foothold in the food safety business with this validation as it will help reduce the incidence of bacterial contamination of livestock.

Industry Prospects

Per a report by Mordor Intelligence, the global livestock and meat industry is expected to see a significant CAGR over the forecast period 2019-2024. The global meat consumption in kg per capita increased from 64kgs in 2005-07 to 67kgs in 2017 in industrial countries. For the developing countries, the global meat consumption in kg per capita increased from 24kgs to 27kgs during the same period. Considering this huge market potential, we believe the latest validation by AOAC is well timed.

Some Recent Developments

Of late, Neogen has seen a slew of strategic developments within its Food Safety business.

On Aug 19, the company announced the signing of a development and licensing agreement with Corvium, Inc., allowing Neogen’s customers exclusive access to an improved version of Corvium’s award-winning CONTROL-PRO food risk intelligence platform. This innovative platform will aid Neogen customers to automate food safety workflows and continuously monitor and analyze food risk data generated by the company’s food safety diagnostic products.

The same month, the company received the Performance Tested Method Certification from the AOAC for its Reveal Q+ for Deoxynivalenol (DON) test, which is designed for the rapid quantification of the mold toxin in grains. This allows grain producers, processors and regulators to add this test in their list of Neogen’s products they can rely on to ensure the safety of worldwide food and feed supply.

Share Price Performance

The stock has gained 26.6% in a year’s time, outperforming the industry’s rise of 16.4%. The stock has also outpaced the S&P 500 index’s rally of 14.3%.

Zacks Rank & Key Picks

Currently, Neogen carries a Zacks Rank #3 (Hold). A few other better-ranked stocks from the broader medical space are Capricor Therapeutics, Inc. CAPR, National Vision Holdings, Inc. EYE and LeMaitre Vascular, Inc. LMAT. You can see  the complete list of today’s Zacks #1 Rank stocks here.

Capricor, holding a Zacks Rank #2 (Buy), estimates third-quarter earnings growth of 28.18%.

Zacks Ranked #2 National Vision’s long-term earnings growth rate is projected at 17.2%.

LeMaitre Vascular’s, holding a Zacks Rank #1, has a long-term earnings growth rate projection of 10%.

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