Is Neogen (NEOG) a Buy Ahead of Q4 Earnings Amid Declining Revenue and Restructuring Efforts?

Neogen Corporation (NEOG), a leader in food safety and genomic testing, has been navigating a complex landscape of restructuring, declining revenue, and strategic realignment. As the company prepares to report Q4 2026 earnings on January 8, 2026, investors are left weighing the potential for recovery against persistent headwinds. This analysis evaluates Neogen's investment merits by dissecting its financial guidance, operational overhauls, and market dynamics to determine whether the stock offers compelling upside or faces structural risks.

Restructuring and Strategic Shifts: A Double-Edged Sword

Neogen has embarked on aggressive restructuring efforts in 2025 to streamline operations and improve profitability. These include a 10% global workforce reduction, rightsizing its Genomics business, and exploring the potential sale of non-core assets. The company also appointed new leadership, with Mike Nassif as CEO and Bryan Riggsbee as CFO, signaling a strategic pivot toward operational efficiency and innovation.

However, these efforts have come at a cost. A $456.3 million non-cash goodwill impairment in Q2 2025 and a $612.2 million net loss in Q4 2025 highlight the financial strain of restructuring. While adjusted EBITDA improved to $40.6 million in Q4 2025, the company's core revenue growth- 3.5% in Q2 2025-suggests underlying demand in its food safety segment. Neogen's collaboration with biotech firm Biomatter in August 2025 further underscores its pivot toward innovation, potentially unlocking long-term value.

Financial Performance: Mixed Signals Amid Uncertainty

Neogen's recent financial results reflect a tug-of-war between cost-cutting and market challenges. For Q4 2025, the company reported $225.5 million in revenue but a net loss of $612.2 million due to goodwill impairment. In Q1 2026, revenue fell 3.6% year-over-year to $209.2 million, though adjusted EPS of $0.04 exceeded expectations.

The company's full-year 2026 guidance-$820–840 million in revenue and $165–175 million in adjusted EBITDA-suggests cautious optimism. Analysts project Q4 2026 revenue of $209.7 million, a 9.3% decline YoY, but Neogen's reaffirmed guidance indicates confidence in a second-half rebound. The forward P/E ratio of 16.28 implies market optimism about future earnings, yet Zacks Research has cut its Q2 2026 EPS forecast to $0.06, reflecting skepticism about near-term recovery.

Analyst Outlook and Market Sentiment: A Cautious Balancing Act

Analyst sentiment is divided. While some highlight Neogen's strategic realignment and innovation pipeline as positives, others warn of structural risks. Zacks' lowered EPS estimates and Neogen's history of missing revenue forecasts- four misses in two years-underscore lingering doubts. The company's EBITDA margin is expected to improve to 20% by 2027, but this timeline may test investor patience.

Leadership changes and cost-cutting measures have bolstered short-term stability, yet the Food Safety segment remains vulnerable to external factors. Elevated trade uncertainty, inflationary pressures on food production, and softer end-market demand continue to cloud the outlook. Neogen's collaboration with Biomatter and its focus on regulatory alignment with USDA initiatives could differentiate it in the long term, but these benefits may not materialize quickly enough to offset current challenges.

Risks and Structural Headwinds

Neogen's path to recovery is fraught with risks. The goodwill impairment from the 3M Food Safety acquisition remains a drag on profitability, and declining revenue trends- -3.60% YoY-suggest structural weaknesses in its core markets. While the company's adjusted EBITDA guidance for 2026 is robust, this metric excludes one-time charges, masking the true financial health.

Moreover, Neogen's reliance on the Food Safety segment-accounting for a significant portion of revenue-exposes it to macroeconomic volatility. Trade wars, inflation, and shifting consumer preferences could further erode demand. The proposed sale of the Genomics business may provide liquidity but could also dilute long-term growth potential if executed prematurely.

Conclusion: A High-Risk, High-Reward Proposition

Neogen's restructuring efforts and leadership changes signal a commitment to long-term stability, but the company's current financial performance and market dynamics present significant hurdles. The stock's forward P/E ratio and innovation pipeline offer upside potential, yet declining revenue, goodwill impairments, and analyst skepticism temper optimism.

For risk-tolerant investors, Neogen could be a speculative buy ahead of Q4 2026 earnings, particularly if the company demonstrates progress in cost-cutting and innovation. However, the structural headwinds-particularly in its Food Safety segment-suggest a cautious approach. Until Neogen can translate its strategic realignment into consistent revenue growth and margin expansion, the investment case remains unproven.