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Elanco Animal Health (ELAN)
NYSE:ELAN
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Elanco Animal Health (ELAN) AI Stock Analysis

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ELAN

Elanco Animal Health

(NYSE:ELAN)

Rating:72Outperform
Price Target:
$19.50
▲(2.36% Upside)
Elanco Animal Health's overall stock score reflects a positive financial recovery trajectory, strong technical momentum, and encouraging earnings call outcomes. The strategic CFO appointment further supports growth initiatives. However, caution is advised due to potential short-term technical pullbacks and challenges like tariffs and increased expenses.
Positive Factors
Earnings
Elanco reported upside 2Q results, with sales, EBITDA, and EPS all ahead of expectations.
Guidance
The company raised 2025 guidance - including organic CC growth from 4% to 5-6%.
Product Launches
The 2025 innovation sales target was raised once again by $60MM, further underscoring the momentum of the company's recent product launches, highlighted by robust Credelio Quattro uptake in just two quarters.
Negative Factors
Competitive Landscape
The implied 4Q guidance appears conservative to account for potential changes to the competitive landscape, at this juncture, but does imply a deceleration in revenue growth.
Market Competition
The backdrop could become more challenging due to potential new entrants in the market.

Elanco Animal Health (ELAN) vs. SPDR S&P 500 ETF (SPY)

Elanco Animal Health Business Overview & Revenue Model

Company DescriptionElanco Animal Health (ELAN) is a global leader in animal health, dedicated to advancing the health and well-being of pets and livestock. The company operates in two primary sectors: companion animals and food animals, providing a range of innovative products, including vaccines, parasiticides, antibiotics, and nutritional supplements. Elanco's mission is to enhance animal health through science-based solutions, ensuring better lives for animals and the people who care for them.
How the Company Makes MoneyElanco Animal Health generates revenue through the sale of a diverse portfolio of animal health products and services aimed at both companion animals and livestock. The company's key revenue streams include the sale of pharmaceuticals, vaccines, and nutritional products. Elanco also benefits from long-term partnerships with veterinarians, animal producers, and distributors, which help to expand its market reach. Additionally, the company invests in research and development to bring new products to market, which can lead to increased sales and market share. Factors contributing to its earnings include the growing global demand for animal protein, increased pet ownership, and an emphasis on animal welfare, all of which drive the need for effective animal health solutions.

Elanco Animal Health Earnings Call Summary

Earnings Call Date:Aug 07, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Nov 11, 2025
Earnings Call Sentiment Positive
The earnings call presented a strong performance with significant growth in organic revenue and innovation, supported by a robust Farm Animal segment and improved leverage ratios. However, the impact of tariffs and increased operating expenses, along with a decline in gross margin, presented challenges. The positive aspects of the call, including record growth and innovation success, outweigh the lowlights.
Q2-2025 Updates
Positive Updates
Record Organic Growth
Elanco achieved 8% organic constant currency revenue growth, driven by U.S. Pet Health up 11%, marking the 8th consecutive quarter of underlying growth.
Innovation Revenue Exceeds Expectations
Innovation achieved $420 million in first half revenue, with full-year expectations raised by $60 million to $720 million to $800 million.
Improved Leverage Ratio
Net leverage ratio improved to 4.0x, with expectations to reach 3.8 to 4.1x by year-end, driven by strong cash generation and operational performance.
Strong Performance in Farm Animal Segment
U.S. Farm Animal business up 5%, driven by Experior with rapid adoption and positive market leadership in beef, poultry, and swine.
Expanded Global Reach with Product Approvals
Zenrelia received approval in the EU and Switzerland, with strong launches in Brazil, Canada, and Japan, expanding Elanco's global footprint.
Negative Updates
Impact of Tariffs and Economic Uncertainty
Estimated 2025 net impact of tariffs is $10 million to $14 million, requiring mitigating actions and creating a cautious approach to guidance.
Increased Operating Expenses
Operating expenses increased by 11% year-over-year, driven by global Pet Health product launch investments and delayed parasiticide season.
Decline in Gross Margin
Gross margin decreased by 90 basis points to 57.3%, impacted by inflation and higher manufacturing costs.
Company Guidance
During Elanco Animal Health's second quarter 2025 earnings call, the company reported an 8% organic constant currency revenue growth, surpassing expectations for revenue, adjusted EBITDA, and adjusted EPS. The U.S. Pet Health segment led with an 11% growth, driven by both price and volume, marking eight consecutive quarters of underlying growth. Innovation was a key driver, generating $420 million in first-half revenue, prompting the company to raise full-year expectations by $60 million to a range of $720 million to $800 million. Elanco improved its net leverage ratio to 4.0x, thanks to strong cash generation and working capital discipline, and revised its year-end net leverage target to 3.8x to 4.1x. Despite potential tariff impacts, the company maintained a 2025 guidance of 5% to 6% organic constant currency growth, $850 million to $890 million in adjusted EBITDA, and adjusted EPS between $0.85 and $0.91, showcasing confidence in its ability to navigate external uncertainties while executing its long-term growth strategy.

Elanco Animal Health Financial Statement Overview

Summary
Elanco Animal Health is showing signs of financial recovery with improved revenue growth and profitability margins in the TTM. The balance sheet is stabilizing with reduced leverage, and cash flow metrics indicate strong cash generation. While historical volatility in profitability and debt levels pose risks, the current trajectory suggests a positive outlook for the company.
Income Statement
65
Positive
Elanco Animal Health has shown a positive revenue growth trend in the TTM, with a Gross Profit Margin of 48.86% and a Net Profit Margin of 9.68%. The EBIT and EBITDA margins are healthy at 15.88% and 32.20%, respectively. However, the company has experienced fluctuations in profitability over the past years, with a significant net loss in 2023. Despite this, the recent improvements in margins and revenue growth indicate a recovery trajectory.
Balance Sheet
60
Neutral
The company's Debt-to-Equity Ratio has improved to 0.62 in the TTM, indicating a reduction in leverage compared to previous years. The Return on Equity is modest at 6.74%, reflecting moderate profitability. The Equity Ratio stands at 49.29%, suggesting a stable financial structure. While the balance sheet shows signs of strengthening, the company still carries a significant amount of debt.
Cash Flow
70
Positive
Elanco's cash flow position has improved, with a Free Cash Flow Growth Rate of 4.11% in the TTM. The Operating Cash Flow to Net Income Ratio is 0.41, and the Free Cash Flow to Net Income Ratio is 0.62, indicating good cash generation relative to net income. The positive cash flow trends suggest improved operational efficiency and financial health.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue4.48B4.44B4.42B4.41B4.76B3.27B
Gross Profit1.93B1.91B1.94B1.97B2.08B1.25B
EBITDA1.53B1.49B-224.00M866.00M409.00M900.00K
Net Income434.00M338.00M-1.23B-78.00M-483.00M-560.10M
Balance Sheet
Total Assets13.74B12.61B14.36B15.49B16.48B17.69B
Cash, Cash Equivalents and Short-Term Investments539.00M468.00M352.00M345.00M638.00M494.70M
Total Debt4.21B4.32B5.77B5.84B6.32B6.13B
Total Liabilities6.97B6.52B8.14B8.20B8.95B9.22B
Stockholders Equity6.78B6.10B6.22B7.29B7.54B8.48B
Cash Flow
Free Cash Flow355.00M394.00M117.00M268.00M286.00M-351.90M
Operating Cash Flow572.00M541.00M271.00M452.00M483.00M-41.00M
Investing Cash Flow1.04B1.16B-169.00M-179.00M-530.00M-4.78B
Financing Cash Flow-1.48B-1.49B-83.00M-549.00M210.00M4.95B

Elanco Animal Health Technical Analysis

Technical Analysis Sentiment
Positive
Last Price19.05
Price Trends
50DMA
15.95
Positive
100DMA
14.01
Positive
200DMA
12.75
Positive
Market Momentum
MACD
0.73
Positive
RSI
70.18
Negative
STOCH
64.73
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ELAN, the sentiment is Positive. The current price of 19.05 is above the 20-day moving average (MA) of 17.88, above the 50-day MA of 15.95, and above the 200-day MA of 12.75, indicating a bullish trend. The MACD of 0.73 indicates Positive momentum. The RSI at 70.18 is Negative, neither overbought nor oversold. The STOCH value of 64.73 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (51)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
76
Outperform
$67.95B26.3852.54%1.27%5.27%13.72%
74
Outperform
$12.03B17.9317.48%0.64%13.13%-0.47%
72
Outperform
$9.16B21.126.83%-0.18%
66
Neutral
$1.60B33.2517.80%1.22%27.37%1898.99%
59
Neutral
$12.24B-19.77%4.58%-7.47%-438.39%
58
Neutral
$21.66B-2.31%2.43%64.37%
51
Neutral
$7.95B-0.38-43.43%2.22%22.30%-1.83%
* Healthcare Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
ELAN
Elanco Animal Health
19.05
4.53
31.20%
RDY
Dr Reddy's Laboratories
14.26
-1.44
-9.17%
VTRS
Viatris
10.48
-0.18
-1.69%
TEVA
Teva Pharmaceutical
19.30
1.78
10.16%
ZTS
Zoetis
151.75
-37.31
-19.73%
PAHC
Phibro Animal Health
39.43
18.93
92.34%

Elanco Animal Health Corporate Events

Private Placements and FinancingBusiness Operations and Strategy
Elanco Animal Health Amends Receivables Loan Agreement
Neutral
Jun 26, 2025

On June 25, 2025, Elanco Animal Health Incorporated, along with Elanco SPEAR LLC and Elanco US Inc., amended its Receivables Loan Agreement with Rabobank, extending the term of the agreement to June 26, 2028. This amendment impacts the company’s accounts receivable securitization facility, potentially affecting its financial obligations and operational flexibility.

Executive/Board ChangesBusiness Operations and Strategy
Elanco Appoints New CFO to Drive Growth
Positive
May 28, 2025

On May 28, 2025, Elanco Animal Health announced the appointment of Robert VanHimbergen as Executive Vice President and Chief Financial Officer, effective July 7, 2025. VanHimbergen, who previously held leadership roles at Hillenbrand, Inc. and Johnson Controls, will succeed Todd Young, who will remain as an advisor until August 31, 2025, to ensure a smooth transition. This strategic appointment is part of Elanco’s commitment to long-term value creation, with VanHimbergen’s extensive experience expected to support the company’s growth and innovation initiatives. The transition marks a proactive change as Elanco continues to focus on accelerating growth, expanding margins, and enhancing shareholder value.

Executive/Board ChangesShareholder Meetings
Elanco Shareholders Approve Board and Compensation Plans
Neutral
May 21, 2025

On May 16, 2025, Elanco Animal Health held its annual meeting of shareholders where all board-nominated directors were elected for a one-year term. Shareholders ratified Ernst & Young LLP as the independent accounting firm for 2025, approved executive compensation, and decided on an annual advisory vote on executive compensation until 2031, aligning with the board’s recommendation.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Aug 19, 2025