We recently compiled a list of the 10 Best Pet Stocks To Invest In According to Analysts. In this article, we are going to take a look at where Neogen Corporation (NASDAQ:NEOG) stands against the other pet stocks.

Pet Industry at a Glance

The pet industry is a rapidly growing sector. It was valued at approximately $320 billion in 2023 and is projected to reach nearly $500 billion by 2030, according to Bloomberg Intelligence’s Pet Economy Report. This growth is driven by a rising global pet population and an increasing trend of pet humanization, where owners treat pets as family members and are willing to spend more on their care, including premium food and health services.

The report notes that the US is positioned to remain the largest pet market. In the United States, the market is expected to approach $200 billion by 2030, with significant spending on veterinary care and pet healthcare products.

Ann-Hunter Van Kirk, Bloomberg Intelligence Senior Biopharmaceutical Analyst and co-author of the report, noted that improved pet nutrition is contributing to longer lifespans for pets, which in turn drives up spending on healthcare for aging animals. Analysts expect this trend of increased spending on pet health to continue over the next decade.

Diana Rosero-Pena, Bloomberg Intelligence Consumer Staples Analyst and co-author of the report, highlighted a notable rise in consumer spending on pet products, predicting that the pet food market could grow by more than 50% by 2030.

Shopping Trends Among Pet Owners

In April 2024, Acosta Group released the results of a new study highlighting important insights into pet parents’ shopping habits. With two in three US households owning at least one dog or cat, spending on pet food, treats, and healthcare has become a significant part of household budgets. The study found that 96% of pet parents consider their pets family members, and 86% are willing to adjust their budgets to accommodate their pets’ needs. This presents a valuable opportunity for retailers and brands to target this large audience.

The study also highlighted key preferences among pet parents regarding food choices. 42% prioritize high-protein content for their pets, followed closely by 40% who focus on joint care and 38% who seek probiotics for gut health. Additionally, 36% of pet parents are interested in fresh, minimally processed foods. Brand loyalty plays a significant role in purchasing decisions, with 57% of dog owners and 59% of cat owners sticking to brands they have previously purchased. However, impulse buying is common, especially among millennials, with 58% influenced by in-store promotions. Most pet owners are turning to mass retailers, pet specialty stores, and online retailers for their pet care purchases, indicating a shift in how pet care products are accessed.

Overall, the pet industry remains a vital part of the global economy, driven by strong consumer attachment to pets and an ongoing commitment to their well-being.

Our Methodology

To compile our list of the 10 best pet stocks to invest in according to analysts, we reviewed our own rankings and consulted various online resources. From an initial pool of more than 20 pet stocks, we focused on the top pet stocks that analysts believe have the most potential for growth. We ranked the 10 best pet stocks to buy based on their average price target upside potential according to analysts as of October 29, 2024.

Additionally, we mentioned the hedge fund sentiment surrounding each stock, which was taken from Insider Monkey’s database of 912 elite hedge funds as of Q2 of 2024.

Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

Neogen Corporation (NASDAQ:NEOG)

Average Price Target Upside Potential According to Analysts: 30.75%

Number of Hedge Fund Holders: 16

Neogen Corporation (NASDAQ:NEOG) is a food and animal safety company that ranks among the top 3 on our list of the best pet stocks to invest in according to analysts. The company has developed comprehensive solutions for the food safety, livestock, and pet health and wellness market. Neogen Corporation (NASDAQ:NEOG) has a presence in more than 140 countries around the world.

In the Animal Safety segment, the company is currently facing challenging market conditions. The management believes the end market is near cyclical lows. Despite this, Neogen Corporation (NASDAQ:NEOG) continues to see supportive sales from its products to end users. The decline in core revenue is mainly due to fluctuations in inventory levels among distribution partners and timing issues. Operationally, Neogen’s (NASDAQ:NEOG) profit margins were impacted by lower sales volumes and increased shipping costs. To address these challenges, the company is implementing various initiatives aimed at improving margins and enhancing overall performance.

In its first quarter of fiscal 2025 results, the company faced challenges in its Animal Safety segment, where revenues dropped by 8.1% year-over-year to $57.6 million.

Neogen Corporation’s (NASDAQ:NEOG) food and animal safety solutions are increasingly vital in today’s market, especially given recent high-profile contamination incidents. The company provides essential testing services that help prevent costly recalls and protect consumer health. With a strong portfolio of validated products and a reputation as a trusted partner, Neogen Corporation (NASDAQ:NEOG) is well-positioned to support businesses in maintaining food safety standards.

In September, the company crossed the 2-year anniversary of the 3M Food Safety transaction, which has strengthened its product offerings and global reach. In the Q1 2025 earnings call, Neogen Corporation’s (NASDAQ:NEOG) management shared that they have resolved the system issues in their distribution center that affected the company’s order fulfillment. Now that shipping challenges are no longer a problem, the company’s main focus is on growing its market share.

While Neogen Corporation (NASDAQ:NEOG) has experienced some setbacks, its strategic initiatives combined with its global presence and innovative solutions in the food and animal safety market, suggest potential for future growth.

Analysts have a positive outlook on NEOG. Their 12-month median price target indicates a potential increase of 30% from the stock’s current price.

According to Insider Monkey’s database of over 900 hedge funds, 16 hedge funds held stakes in Neogen Corporation (NASDAQ:NEOG) in Q2 2024.

Overall, NEOG ranks 3rd on our list of the best pet stocks to invest in according to analysts. While we acknowledge the potential of NEOG as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NEOG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.