Neogen Corporation (NEOG): A Turnaround Opportunity Amid Legal Risks and Strategic Shifts

Assessing the Investment Potential of Neogen Corporation

Neogen Corporation (NEOG), a leader in food and animal safety diagnostics, finds itself at a crossroads in 2025. The company's recent operational and legal challenges—coupled with its strategic repositioning—have sparked debate among investors about whether it represents a compelling value opportunity or a high-risk proposition. This analysis evaluates Neogen's investment potential through the lens of its ongoing securities litigation, leadership instability, and financial underperformance, while considering the implications of the September 16, 2025 legal deadline for lead plaintiff applications.

Legal Risks: A Class-Action Lawsuit and Investor Uncertainty

Neogen is currently embroiled in a securities class-action lawsuit filed in the U.S. District Court for the Western District of Michigan. The lawsuit alleges that the company and certain executives failed to disclose material information during the Class Period (January 5, 2023, through June 3, 2025) [NEOGEN 96 HOUR DEADLINE ALERT: Former Louisiana Attorney General and Kahn Swick & Foti, LLC Remind Investors With Losses in Excess of $100,000 of Deadline in Class Action Lawsuit Against Neogen Corporation (NEOG)]^[1]. Investors who purchased shares during this period are reminded that they must file lead plaintiff applications by September 16, 2025 .

The litigation stems from a series of disclosures that rattled investor confidence. On April 9, 2025, Neogen reported a 3.4% quarterly revenue decline to $221 million, attributed to integration challenges following its 2022 acquisition of 3M's food-safety business. The company also revised its FY25 guidance downward, citing reduced adjusted EBITDA and capital expenditures projected to reach $100 million . These announcements coincided with the departure of its CEO, triggering a 28% drop in its stock price to $5.02 per share . Further volatility followed on June 4, 2025, when Neogen projected EBITDA margins to fall to the “high-teens,” down from 22% in the prior quarter, leading to an additional 17% decline in share price .

The lawsuit's resolution could have significant financial and reputational consequences for Neogen. While the company has not yet disclosed potential liabilities, the legal uncertainty may deter short-term investors. However, for value investors, the September 16 deadline could mark a turning point. If the lawsuit is resolved favorably or dismissed, the stock might experience a rebound, particularly if Neogen demonstrates operational stability post-deadline.

Operational Challenges: Integration Woes and Leadership Instability

Neogen's financial struggles are compounded by integration challenges and leadership instability. The 2022 acquisition of 3M's food-safety business, while strategically sound, has proven operationally complex. The company has cited integration-related costs as a drag on performance, with capital expenditures accelerating into FY25 . These issues have eroded investor trust, particularly after the CEO's abrupt departure in Q2 2025.

The leadership vacuum raises questions about Neogen's ability to execute its strategic vision. While the company has not announced a replacement CEO as of this writing, its management team must now address both operational inefficiencies and investor skepticism. The lack of recent business divestitures in 2025—unlike its history of strategic acquisitions—suggests a focus on consolidation rather than asset rationalization Neogen - Wikipedia^[7]. This approach could either stabilize the business or prolong underperformance, depending on the success of integration efforts.

Strategic Shifts: A Path to Turnaround?

Despite these headwinds, Neogen's core business remains resilient. The global demand for food and animal safety solutions is expected to grow, driven by regulatory pressures and consumer awareness. Neogen's expertise in diagnostic testing positions it to benefit from this trend, provided it can stabilize its operations.

The company's recent financial disclosures hint at a potential turnaround. For instance, the downward revision of FY25 guidance may reflect a more realistic assessment of integration timelines, which could eventually lead to improved margins. Additionally, the lawsuit's resolution—whether through settlement or dismissal—could remove a key overhang on the stock.

However, the path to recovery is far from guaranteed. Neogen must address its integration challenges, rebuild leadership credibility, and demonstrate a clear strategy for margin expansion. The absence of recent divestitures suggests a reluctance to shed non-core assets, which could delay profitability improvements.

Investment Implications: Balancing Risk and Reward

For value investors, Neogen presents a high-risk, high-reward scenario. The stock's current valuation—trading at a significant discount to historical levels—reflects pessimism about its near-term prospects. However, the September 16 legal deadline could act as a catalyst for clarity. If the lawsuit is resolved favorably, and Neogen stabilizes its operations, the stock may offer substantial upside.

Conversely, the risks remain acute. A protracted legal battle or continued operational missteps could further depress the stock price. Investors must also consider the broader market environment, including sector-specific challenges in the food-safety industry.

In conclusion, Neogen's investment potential hinges on its ability to navigate legal and operational turbulence. While the company's core business remains intact, its success will depend on effective leadership, disciplined integration, and a favorable resolution of the class-action lawsuit. For those willing to tolerate short-term volatility, the September 16 deadline may represent a critical inflection point.