Before The Bell: Diagnosing Neogen's Q2 Earnings Report

Neogen NEOG, the maker of diagnostic products for food and animal safety, reports its fiscal second-quarter results before the bell on Tuesday. Analysts are expecting a profit of 27 cents a share on revenue of $47.4 million, which represent an almost 8% increase from the year earlier quarter. EPS estimates range from 25 cents to 28 cents. Neogen has posted increasing revenue for five consecutive quarter and rising earnings in three straight quarters. Trading at just over 26 times forward earnings, Neogen closed at $32.10 on Wednesday, well below the average price target of $38.80. The shares are down almost 22% year-to-date. Michigan-based Neogen's immunoassay test kits are used for the detection of abused and therapeutic drugs in farm animals and racing animals, such as horses, greyhounds, and camels; detection of drug residues in meat and meat products; and human forensic toxicology drug screening applications. Analysts and investors will likely be focusing on operating margins and outlook for the full-year. The most recent gross margin was 50.1% with operating margins of 20.28%. Looking at the chart, the stock would be in trouble on a drop below $32. The shares were down almost 3% on more than triple the average daily volume on Wednesday.