Analyst Jonathan Block from Stifel Nicolaus maintained a Buy rating on Elanco Animal Health and increased the price target to $27.00 from $23.00.
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Jonathan Block has given his Buy rating due to a combination of factors that highlight Elanco Animal Health’s promising future. The company has experienced a positive shift, with its new products gaining traction faster than expected, leading to an accelerated growth rate. This has allowed Elanco’s stock to trade at a premium compared to Zoetis, with expectations of faster growth in 2025. Moreover, Elanco’s margins are currently lower than Zoetis’, but there is a significant opportunity for margin expansion in the next 12-24 months, which should result in substantial EBITDA growth.
In addition, management has indicated that price growth will be a tailwind for 2026, with innovations like Zenrelia contributing to this trend. The revenue from the higher gross margin Innovation segment is expected to remain strong, supporting both gross margin expansion and operating expense leverage. Furthermore, the potential for a cleaner U.S. Zenrelia label and progress in international markets could aid future market share gains. Despite some potential headwinds, such as competitive pressures and U.S. vet visit volume declines, the overall outlook for Elanco remains positive, justifying the Buy rating.