Shuoteng Co., Ltd. acquires Neogen Genomics business, Bank of America and Leerink comment, stock price still declines

Investing.com – Zoetis (NYSE: ZTS) stock fell 1.55% on Monday after the animal health company announced it would acquire Neogen Corporation’s (NASDAQ: NEOG) animal genomics business for $160 million.

The deal will give Zoetis access to Neogen’s genetic testing technology and data tools to predict animal health and tailor care plans for individual animals. Neogen’s genomics operations run five laboratories in the U.S., Brazil, Australia, China, and the UK, serving customers in over 120 countries.

According to Bank of America analysts, “NEOG’s genomics division has underperformed in recent quarters due to weak companion animal testing, along with macro pressures such as inflation and soft consumer spending, as well as a strategic shift toward large production animals. The company has previously indicated plans to divest its genomics business to streamline its product portfolio and focus on faster-growing, more profitable animal health markets, so this acquisition was not surprising.”

Leerink analysts noted that while this deal isn’t a major financial driver, it strengthens Zoetis’s livestock business. “Although the impact is modest, we see this as strategically reasonable, moderately enhancing the company’s focus on livestock and its genomics operations. Most of the acquired assets’ revenue (about 55%) comes from cattle, increasing ZTS’s exposure to its best-performing livestock end markets,” the analysts commented.

The acquired business enables farmers to make more informed herd management decisions, improving producers’ economic efficiency. Leerink also pointed out that the business has been restructured, shifting away from the weaker-demand companion animal testing sector.

This article was translated with the assistance of artificial intelligence. For more information, please see our Terms of Use.