Neogen Corp. (NEOG) delivered a pleasant surprise to investors this week, posting second-quarter results that sailed past Wall Street expectations and raising its outlook for the year. The food and animal safety testing company is showing signs that its turnaround efforts might actually be working.

For the second quarter of fiscal 2026, adjusted earnings came in at 10 cents per share, handily beating the consensus estimate of 6 cents. Revenue reached $224.69 million, down 2.8% year-over-year but still crushing analyst expectations of $207.85 million. More importantly, core revenue actually grew 2.9%, suggesting the underlying business is healthier than the headline numbers indicate.

"As we look to the second half of the fiscal year, we remain highly focused on the integration of Petrifilm and optimization of sample collection manufacturing, as well as enhancing our solutions-based selling approach and implementing a continuous review of resource allocation across the enterprise," said Mike Nassif, Neogen's CEO and President.

The picture wasn't entirely rosy. Gross margin compressed to 47.5% from 49.0% a year ago, squeezed by tariff costs, inventory write-offs, and an unfavorable product mix. Adjusted EBITDA came in at $48.7 million with a 21.7% margin, down slightly from $51.4 million and 22.2% in the prior-year period.

Mixed Results Across Business Segments

The Food Safety segment delivered revenue of $165.6 million, up 0.8% year-over-year. Growth came from Indicator Testing and Culture Media, powered by higher demand for sample collection products and continued strength in Petrifilm sales.

The Animal Safety segment had a tougher quarter, with revenue falling 11.8% to $59.1 million. Lower sales of needles and syringes in the Veterinary Instruments & Disposables category weighed on results, while Life Sciences was hit primarily by timing issues around substrate purchase fulfillment.

Raised Guidance Signals Confidence

Here's where things get interesting. Neogen raised its fiscal 2026 sales guidance from $820 million-$840 million to $845 million-$855 million, well above the consensus estimate of $823.30 million. The company also lifted its adjusted EBITDA expectation to approximately $175 million, compared to the prior range of $165 million to $175 million. Capital expenditures remain pegged at around $50 million.

For a company that offers tests for cattle, swine, sheep, and goat diseases, these numbers suggest management is gaining confidence in the business trajectory.

William Blair analysts maintained their Market Perform rating, noting that "with shares at 15 times our 2026 EBITDA estimate, we maintain our Market Perform rating given the early nature of the turnaround effort. That said, we acknowledge what is already an improving story under new leadership."

Investors clearly liked what they heard. Neogen shares jumped 29.34% to $9.54 following the announcement, according to market data.