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Elanco Animal Health (ELAN)
NYSE:ELAN
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Elanco Animal Health
(NYSE:ELAN)
65Neutral
Positive Factors
Debt Management
Company paid down 25% of its debt in 2024 to reach 4.3x leverage versus 5.6x in 2023.
Innovation and Product Development
Innovation Product sales are expected to be driven by Credelio Quattro and Experior, showing a significant increase.
Negative Factors
Earnings Performance
The company's 4Q EPS of $0.14 was slightly below consensus expectations.
Foreign Exchange Impact
FX remains a major headwind for ELAN, with an expected drag of $45mn on Adj EBITDA, $110mn on revenue, and 7c on Adj EPS.
Elanco Animal Health (ELAN) vs. S&P 500 (SPY)
Market Cap
$4.53B
Dividend YieldN/A
Average Volume (3M)4.82M
Price to Earnings (P/E)13.2
Beta (1Y)1.61
Revenue Growth0.50%
EPS GrowthN/A
CountryUS
Employees9,000
SectorHealthcare
Sector Strength77
IndustryDrug Manufacturers - Specialty & Generic
Share Statistics
EPS (TTM)0.68
Shares Outstanding496,458,370
10 Day Avg. Volume4,738,358
30 Day Avg. Volume4,815,015
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.17
Price to Cash Flow (P/CF)7.40
P/FCF Ratio10.50
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$15.33Price Target Upside84.03% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering10
Elanco Animal Health Business Overview & Revenue Model
Company DescriptionElanco Animal Health Incorporated (ELAN) is a global leader in animal health, dedicated to innovating and delivering products and services to improve the health of animals. The company operates in two primary segments: Companion Animal and Farm Animal. Elanco's core products include pharmaceuticals, vaccines, and parasiticides aimed at enhancing the health and well-being of pets and livestock, ultimately contributing to food safety and animal welfare globally.
How the Company Makes MoneyElanco makes money primarily through the sale of its animal health products, which are broadly categorized into two segments: Companion Animal and Farm Animal. In the Companion Animal segment, revenue is generated from the sale of products such as flea and tick treatments, heartworm preventatives, and therapeutic drugs for pets. The Farm Animal segment focuses on products for livestock and poultry, including vaccines, nutritional supplements, and antibiotics, which help improve animal productivity and health. Elanco also engages in strategic partnerships and collaborations with veterinary clinics, agricultural producers, and research institutions to enhance product distribution and innovation, further contributing to its revenue streams. The company's earnings are influenced by factors such as global demand for protein, pet ownership trends, and regulatory approvals for new products.
Elanco Animal Health Financial Statement Overview
Summary
Elanco Animal Health's financial performance shows signs of recovery and stability. The income statement reflects improved profitability, while the balance sheet demonstrates healthier leverage levels. Cash flow generation is strong, underpinning financial flexibility. The company should continue focusing on operational efficiency and cash flow management to sustain growth and enhance shareholder value.Income Statement
Elanco Animal Health shows a stable revenue base with a slight revenue growth of 0.5% for the latest year. The gross profit margin stands at 43.0%, indicating effective cost management. The net profit margin improved significantly from a loss to 7.6%, reflecting a turnaround in profitability. However, EBIT and EBITDA margins remain modest at 5.7%. The company needs to focus on enhancing operational efficiencies to sustain profitability.70
Positive
Balance Sheet
The debt-to-equity ratio improved to 0.71, suggesting a better leverage position compared to previous years. ROE stands at 5.5%, indicating moderate returns for shareholders. The equity ratio of 48.3% highlights a balanced capital structure. The company's balance sheet is stabilizing, though further strengthening of equity would enhance financial resilience.65
Positive
Cash Flow
Free cash flow grew significantly by 236.8% due to improved operating cash flows and reduced capital expenditures. The operating cash flow to net income ratio is robust at 1.60, indicating strong cash generation relative to earnings. The free cash flow to net income ratio of 1.17 further confirms healthy cash profitability. Continued focus on cash generation will support strategic investments and debt reduction.75
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 4.44B | 4.42B | 4.42B | 4.76B | 3.27B | Gross Profit |
| 1.91B | 1.94B | 2.50B | 2.63B | 1.61B | EBIT |
| 251.00M | 326.00M | 358.00M | 297.00M | 101.50M | EBITDA |
| 1.39B | -224.00M | 866.00M | 409.00M | -76.80M | Net Income Common Stockholders |
| 338.00M | -1.23B | -74.00M | -472.00M | -560.10M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 468.00M | 352.00M | 345.00M | 638.00M | 494.70M | Total Assets |
| 12.61B | 14.36B | 15.49B | 16.48B | 17.69B | Total Debt |
| 4.32B | 5.77B | 5.84B | 6.32B | 6.13B | Net Debt |
| 3.85B | 5.42B | 5.49B | 5.68B | 5.63B | Total Liabilities |
| 6.52B | 8.14B | 8.20B | 8.95B | 9.22B | Stockholders Equity |
| 6.10B | 6.22B | 7.29B | 7.54B | 8.48B |
| Cash Flow | Free Cash Flow | |||
| 394.00M | 117.00M | 268.00M | 286.00M | -351.90M | Operating Cash Flow |
| 541.00M | 271.00M | 452.00M | 483.00M | -41.00M | Investing Cash Flow |
| 1.16B | -169.00M | -179.00M | -530.00M | -4.78B | Financing Cash Flow |
| -1.49B | -83.00M | -549.00M | 210.00M | 4.95B |
Elanco Animal Health Technical Analysis
Negative
8.33
Price Trends
10.91
Negative
11.69
Negative
12.83
Negative
Market Momentum
-0.18
Negative
41.98
Neutral
31.79
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ELAN, the sentiment is Negative. The current price of 8.33 is below the 20-day moving average (MA) of 10.26, below the 50-day MA of 10.91, and below the 200-day MA of 12.83, indicating a bearish trend. The MACD of -0.18 indicates Negative momentum. The RSI at 41.98 is Neutral, neither overbought nor oversold. The STOCH value of 31.79 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ELAN.
Elanco Animal Health Risk Analysis
Elanco Animal Health disclosed 46 risk factors in its most recent earnings report. Elanco Animal Health reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Elanco Animal Health Peers Comparison
Overall Rating
UnderperformOutperform
Sector (48)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
70 Outperform | $8.13B | 21.07 | 11.07% | ― | 2.71% | -3.26% | |
65 Neutral | $4.53B | 13.18 | 5.49% | ― | 0.50% | ― | |
64 Neutral | $1.92B | 48.01 | -0.53% | ― | 27.28% | -101.63% | |
62 Neutral | $3.59B | ― | -3.53% | 4.25% | -6.05% | -1677.05% | |
62 Neutral | $2.31B | ― | 106.97% | ― | 16.73% | -22.44% | |
52 Neutral | $1.69B | ― | -16.38% | ― | -0.53% | -4131.19% | |
48 Neutral | $6.35B | 1.19 | -46.87% | 2.63% | 17.16% | 1.34% |
* Healthcare Sector Average
Performance Comparison
ELAN
Elanco Animal Health
8.33
-6.94
-45.45%
HSIC
Henry Schein
64.31
-8.86
-12.11%
LGND
Ligand Pharma
99.41
17.91
21.98%
NEOG
Neogen
7.04
-6.00
-46.01%
PRGO
Perrigo Company
24.55
-6.43
-20.76%
AMRX
Amneal Pharmaceuticals
6.99
1.26
21.99%
Elanco Animal Health Earnings Call Summary
Earnings Call Date: Feb 25, 2025 | % Change Since: -25.02% | Next Earnings Date: May 13, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong revenue growth and successful debt reduction, driven by innovation and strategic execution in both Pet Health and Farm Animal segments. However, the call also acknowledged challenges due to foreign exchange headwinds and slower than expected adoption of certain products. Overall, the sentiment was cautiously optimistic, with a focus on continued growth and innovation.Highlights
Sixth Straight Quarter of Revenue Growth
Elanco reported its sixth consecutive quarter of revenue growth, with a 4% increase on an organic constant currency basis for Q4 2024.
Successful Innovation Portfolio
Elanco exceeded its 2024 innovation revenue target, achieving $461 million versus the target of $420 million to $450 million, and increased their expectation for 2025 to $640 million to $720 million.
Debt Reduction
Elanco paid down approximately 25% of its debt in 2024, reducing net leverage to 4.3 times from 5.6 times at the start of the year.
Positive Pet Health Segment Performance
International pet health grew 11% in constant currency, driven by AdTab and Seresto, while U.S. pet health grew 2% with positive contributions from Zenrelia.
Experior Reaches Blockbuster Status
Experior became the first farm animal blockbuster in over a decade, showing strong growth supported by FDA Combo clearance for use in heifers.
Lowlights
Foreign Exchange Headwinds
Strong U.S. dollar negatively impacted financial performance, causing a $10 million reduction to Q4 reported revenue and an estimated $110 million headwind for 2025.
Slow Adoption of Canine Parvovirus Monoclonal Antibody
Adoption of the canine parvovirus monoclonal antibody was slower than expected due to cost considerations versus the importance of treatment.
Challenges in International Farm Animal Segment
International farm animal revenue was flat due to challenging swine economics in Asia and strategic do different commercial model changes.
Gross Margin Decline
Gross margin decreased by 140 basis points for the full year 2024 due to the impact of the aqua divestiture, manufacturing slowdowns, FX headwinds, and inflationary pressures.
Company Guidance
During Elanco Animal Health's fourth-quarter 2024 earnings call, the company provided guidance for 2025, projecting an acceleration in organic constant currency revenue growth of 4% to 6% and an adjusted EBITDA growth of 1% to 5%, excluding foreign exchange (FX) and the divestiture of their aqua business. The guidance reflects confidence in their six blockbuster products and strategic initiatives, including a focus on growth, innovation, and cash flow. Elanco anticipates continued contributions from their innovation portfolio, with expected innovation revenues of $640 million to $720 million, up from $461 million in 2024. Despite FX headwinds, the company is committed to expanding margins and investing strategically in key product launches. Net leverage is expected in the low to mid-4s by year-end 2025, with potential for improvement depending on currency movements.Elanco Animal Health Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Elanco Animal Health Announces Board Changes Amid New Agreement
Positive
Mar 17, 2025
Elanco Animal Health announced changes to its Board of Directors, with several members, including William Doyle, stepping down. Doyle’s resignation is linked to a new research agreement with Elanco through his entity, WEDterinary LLC, focusing on novel therapies for chronic kidney disease and life extension in pets. The agreement aims to leverage gene therapy and AI, enhancing Elanco’s innovation pipeline and positioning the company for long-term growth in the animal health industry.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.