Neogen Plunges 9.87%: Can This Bearish Move Reverse Before the 52W Low?

Summary
• Neogen (NEOG) slumps 9.87% to $4.885, its worst intraday drop since March 2020
• Q4 results reveal $612M goodwill impairment charge, adjusted EPS misses estimates by 44.4%
• Class-action lawsuit allegations and integration challenges weigh on sentiment
• Bollinger Bands squeeze near 52W low as MACD diverges into oversold territory

Neogen’s freefall reflects a perfect storm of accounting headwinds, legal exposure, and market skepticism about its integration strategy. With the stock trading near its 52W low and options volatility spiking to 78%, investors are scrambling to parse whether this is a short-term correction or a structural re-rating of the food safety giant.

Goodwill Impairment and Earnings Miss Trigger Sharp Selloff
Neogen’s 9.87% decline stems from a $612.2M non-cash goodwill impairment charge linked to the 3M Food Safety Division acquisition, which wiped out all Q4 net income and pushed operating margins to -271%. The $0.05 adjusted EPS (vs. $0.09 expected) exposed deteriorating margins and integration inefficiencies, while the class-action lawsuit alleging misleading integration updates amplified risk-off sentiment. CEO John Adent’s admission of 'softer end-market conditions' and 'elevated trade uncertainty' further dented confidence in the company’s core growth narrative.

Diagnostics Sector Mixed as Thermo Fisher Trails Gains
Bear Call Spreads and Volatility Plays in a Volatile Regime
• 200-day average: 9.507 (far above) • 50-day SMA: 5.097 (bearish crossover) • RSI: 54.8 (oversold threshold) • MACD: -0.051 (negative divergence) • Bollinger Bands: 4.63-5.61 (squeeze near lower band)

Key levels to monitor: 4.76 (30D support), 5.12 (middle band), and 5.61 (upper band). The 5.097 30D MA offers a potential short-term floor, but the 52W low at 3.87 remains a looming risk. With implied volatility at 78% for near-term options, volatility plays could outperform directional bets.

• NEOG20250815P5 (Put, $5 strike, 8/15 expiry):
- Implied volatility: 78.55% (high)
- Delta: -0.497 (moderate)
- Theta: -0.00257 (slow decay)
- Gamma: 0.4648 (high sensitivity)
- Turnover: 4,489 (liquid)
- LVR: 12.95% (aggressive)
- Payoff at 5% downside: $0.45/share
- This put contract offers asymmetric reward potential due to high gamma and leverage, ideal for capitalizing on a breakdown below 4.76 support.

• NEOG20250815C5 (Call, $5 strike, 8/15 expiry):
- Implied volatility: 41.59% (reasonable)
- Delta: 0.458 (moderate)
- Theta: -0.01018 (rapid decay)
- Gamma: 0.8732 (extreme sensitivity)
- Turnover: 2,986 (liquid)
- LVR: 32.80% (aggressive)
- Payoff at 5% downside: $0.00/share
- While the call is technically a loser in a bearish scenario, its high gamma makes it a speculative play for a short-term rebound above 5.12 resistance.

Aggressive traders may consider a bear call spread using these contracts, capitalizing on the stock’s volatility while limiting downside risk. Watch for a breakdown below 4.76 to trigger a cascade in short-dated puts.

Backtest Neogen Stock Performance
After an intraday plunge of -10%, the performance of NEOG over the following 3, 10, and 30 days was generally negative, with maximum returns of -0.08% to -4.05% across various time frames. The win rates were 46.38% for 3 days, 44.18% for 10 days, and 36.48% for 30 days, indicating a higher probability of positive returns in the short term compared to the medium and long term. However, the maximum return during the backtest period was -0.08%, which suggests that while there was some recovery, it was not sufficient to make a positive impact on the overall return.

Watch for 4.76 Breakdown or Regulatory Catalyst Before 8/15 Expiry
The 9.87% selloff has exposed structural weaknesses in Neogen’s integration strategy and profitability model, but the stock’s technicals suggest a potential rebound from the 4.76 support level. With Thermo Fisher (TMO) -0.06% in the diagnostics sector, investors should closely monitor the 8/15 options expiry for liquidity-driven volatility. If the stock closes below 4.76, the 3.87 52W low becomes a critical psychological hurdle. Positioning in the NEOG20250815P5 put contract offers a high-leverage bet on continued weakness, while a surprise rebound above 5.12 could reignite long-term buyers. Watch for regulatory updates or earnings revisions to drive the next leg of this volatile trade.