Elanco Animal Health Inc
Elanco Animal Health Inc
IBD Stock Analysis
- Shares rose above 50-day moving average, signaling a potential buy point
- Investors could wait until stock crosses 36.63 buy point out of a flat base
- Composite Rating now stands at 77 out of 99; Relative Strength is at 73
Industry Group Ranking
* Not real-time data. All data shown was captured at
12:56PM EDT on
The company is fresh off an announcement it will acquire Kindred Biosciences (KIN), taking in a trio of potential blockbuster drugs for animals. In the second quarter, analysts call for Elanco to report triple-digit sales and earnings growth as it digests the acquisition of Bayer‘s (BAYRY) animal health business.
In afternoon trading on the stock market today, ELAN stock popped 3.4% to 35.38.
Elanco is a leading animal-health company. It makes pharmaceutical products for pets and livestock. Pet adoptions are on the rise with millennials and Gen Z driving the trend, experts say. Further, people spent more time with their pets and noticed more health issues with them during the pandemic.
ELAN Stock Gets A Boost From Pandemic
The Covid pandemic highlighted “the importance of animals to society — pet and protein,” Elanco Chief Executive Jeffrey Simmons told Investor’s Business Daily in a recent interview.
“We were isolated at home, and pet adoptions started to grow. People want to have companionship and they saw the importance of pets to families,” Simmons said. “There’s no question, we’re seeing pet ownership go up and adoptions increase.”
As a result, pet health companies like Elanco, Zoetis (ZTS) and Idexx Laboratories (IDXX) are gaining traction. On a year-to-date basis, ELAN stock has climbed more than 15% as of midday Tuesday. Shares also rose above their 50-day moving average, signaling a potential buy area.
Strong Growth Expected
In the first quarter, the pet segment drove more than half Elanco’s sales. Excluding the benefit of the Bayer animal health acquisition, Elanco reported 34% growth for its pet health unit. The livestock business grew by a third, though legacy sales fell 7% on an unfavorable comparison.
Next, ELAN stock analysts call for adjusted profit to grow 200% in the second quarter to 27 cents per share. Sales are also expected to pop roughly 112% to $1.24 billion. Both metrics will benefit from the addition of the Bayer animal health business, which closed last August.
Strong growth could undoubtedly help ELAN stock’s ratings. According to IBD Digital, shares rank in the top 23% of all stocks in terms of fundamental and technical measures, noted by the Composite Rating of 77. Leading stocks tend to have CRs of at least 95.
ELAN stock also has a Relative Strength Rating of 73, which puts its 12-month performance in the top 27% of all stocks. But the cream of the crop have RS Ratings of at least 80.
Protein Consumption Rises
Elanco CEO Simmons expects bullish trends to continue for animal-health companies. In addition to growing pet ownership, animal protein consumption is on the rise, he said.
“As anyone makes more money, moving from plants to an animal-based diet is happening,” he said. “People are moving away from carbs and sugar to chicken, fish and lean beef. The world ate more red meat in 2019 than at any time in history.”
Elanco’s job, he said, is to “give animals what they need and consumers what they want.”
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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