A NEOG plug from Analystgroupcom
*******Undervalued Dog*************
Vol. 5, No.187, July 20, 2000
analystgroup.com
A Leading Provider of Micro-Cap Stock Newsletters
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Daily Stock Review
NEOGEN CORP (Nasdaq: NEOG): The stock rose 0.47% to finish at $6 21/32 on
volume of 27,800 shares, 2 times its 3-month daily average. The company
yesterday announced that it recorded the highest quarterly revenues in its
18-year history in its fourth quarter -- surpassing the previous high, its
third quarter. NEOG reported fourth quarter revenues of $6,473,000, a
jump of 23% from the previous year's $5,251,000. The record-breaking
fourth quarter followed Neogen's exceptional third quarter, when revenues
hit $6,276,000 -- an 18% jump from the prior year and the first time the
Company's quarterly revenues exceeded $6 million. Neogen's earnings
soared to $0.22 per share for the fourth quarter. For its 2000 fiscal
year, Neogen's revenues were $23,512,000, a 6% increase from the previous
fiscal year's $22,179,000. Net income rose in fiscal year 2000 to
$3,074,000, or $0.52 per share, a 41% increase from the previous fiscal
year’s as $2,255,000, or $0.37 per share.
We view NEOG as an excellent growth company with great potential for
capital appreciation over the long term. The company has strong
fundamentals including over $12 million in the bank. Biotech companies
typically trade at a market valuation of 20x to 30x sales and 40 to 50x to
earnings. NEOG trades at a market valuation of 1.65x sales and 12.7 x
earnings, therefore, NEOG appears to trade at a deep discount to its peer
group. Over the next 12 months, we are projecting a target price of $25-
$30, or 5x to 6x projected sales or 30x to 40x projected earnings, based
on 5.84 million shares outstanding. We believe this stock's fundamentals
and growth potential warrants this fair market valuation. Therefore, NEOG
is rated "strong buy" with a 12-month target price at $25-$30 |
