What Happened?

Shares of life sciences company Neogen (NASDAQ: NEOG) jumped 5.2% in the afternoon session after an investment group led by Clarkston Capital Partners disclosed a significant 6.44% stake in the company. The disclosure, made in a joint Schedule 13G filing, indicates the shares were acquired in the ordinary course of business and not for the purpose of changing or influencing control of Neogen. This type of filing is often seen as a vote of confidence from institutional investors. The move comes on the heels of other positive developments, including a new partnership with Biomatter to create enzyme-based products using a proprietary platform. Additionally, Neogen recently completed the sale of its cleaners and disinfectants business for $130 million, a strategic divestiture that could allow the company to focus on its core operations. This news is complemented by a 'Buy' consensus rating from Wall Street analysts.

After the initial pop the shares cooled down to $5.48, up 5% from previous close.

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What Is The Market Telling Us

Neogen’s shares are extremely volatile and have had 38 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 1 day ago when the stock gained 3.4% on the news that positive inflation data fueled hopes for an interest rate cut by the Federal Reserve. The latest Consumer Price Index (CPI) report showed inflation rose by a modest 0.2% in July and 2.7% over the last year. This cooler-than-expected data prompted a significant market rally, with the S&P 500, Dow, and Nasdaq all climbing as investors grew more optimistic. The prevailing view is that easing inflation gives the central bank room to lower interest rates. Lower rates typically reduce borrowing costs for businesses and make stocks more attractive relative to bonds, contributing to widespread gains across sectors like healthcare.

Neogen is down 54.1% since the beginning of the year, and at $5.48 per share, it is trading 68.7% below its 52-week high of $17.53 from September 2024. Investors who bought $1,000 worth of Neogen’s shares 5 years ago would now be looking at an investment worth $140.87.

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