Neogen's growth to be fueled by food safety and international markets

SmallCapInvestor.com reporter Jennifer Schonberger is reporting from the 20th Roth Capital Partners Annual OC Growth Stock Conference this week in Dana Point, Calif. The conference features presentations from more than 300 small-cap companies.

In the past six months, there have been 10 highly publicized food recalls involving harmful pathogens, such as E. coli and salmonella. With recent incidents of major food, produce and other product recalls, Neogen Corp. (Nasdaq: NEOG), maker of diagnostic kits to test the safety of food and animal products, is profiting.

“There’s no question that the increased attention and consumer activism has brought some pressure to bear, which has resulted over time with new regulation,” said Lon Bohannon president and chief operating officer of Neogen in an interview at the 20th annual Roth OC Growth Stock Conference this week in Dana Point, Calif. “We’re going to have strengthening imports at our borders, which should result in more testing going forward. Additionally, a lot of industries are taking a look at what they need to do in terms of quality and food safety. All of that has resulted in an increase.”

Markets are growing faster for Neogen on the food safety side because of greater awareness both domestically and internationally.

Going forward international markets should fuel growth for Neogen. According to Bohannon, international markets are twice as large as the domestic market for the company. Three years ago international sales comprised 26% of total sales, compared with 40% of total sales for the first half of fiscal 2008, ended Nov. 27, 2007.

Tighter regulations in Europe should assist in fueling future growth for the company. For the first half of fiscal 2008, Neogen Europe saw sales increase by 35% alone, compared with sales growth of 21% in fiscal 2007.

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