Elanco (ELAN)
NYSEHealth CareDrug Manufacturers - Specialty & GenericSnapshot 2026-09-04
$24.50+0.33%
Close 2026-09-04 · 1-day change
NYSEHealth CareDrug Manufacturers - Specialty & GenericSnapshot 2026-09-04
Warn: Recent financial performance slipped notably this past month, though still top-half.
Elanco grows revenue about 6% a year, hitting $5 billion in 2026. Profit improves with operating income rising from $60 million to $87 million. Cash flow from operations turned positive, supporting growth and investments. New product launches like Befrena boost sales and market share.
Growth could slow below 5% if new products fail to gain traction. Operating income might stall if cost controls weaken. Cash flow could turn negative again, limiting investment and hurting results.
The price is about 16% above our fair value near $21, reflecting roughly 6% revenue growth. We agree with this growth but see limited upside given the stretched valuation.
Breaks if: Operating income falls below $60 million in FY26-Q1
Enhance operating income through cost management and efficiency improvements.
Breaks if: Cash flow from operations falls below $0 in FY26-Q1
Increase cash generated from operating activities to strengthen financial position and reduce leverage.
Stated as a priority in 4 of last 4 quarters. Cash from operations increased from $108 million in 2025-Q4 to $277 million in 2026-Q2. The net leverage ratio improved from 3.6x at 2025 year-end to 3.1x at 2026-Q2. Management's focus on accelerating free cash flow and deleveraging is reflected in these improving financial metrics, indicating delivering progress.
“Cash provided by operations was $277 million in the second quarter of 2026.”
“Cash provided by operations was $13 million in the first quarter of 2026.”
“Cash provided by operations was $108 million in the fourth quarter of 2025.”
“Elanco delivered significant progress across our strategic priorities of growth, innovation, and cash in 2025.”
Breaks if: YoY revenue growth falls below 5% in FY26
Drive organic constant currency revenue growth through innovation, market share gains, and price increases.
Stated as a priority in 4 of last 4 quarters. Revenue grew from $1.144 billion in 2025-Q4 to $1.368 billion in 2026-Q2, with organic constant currency growth of 8% in 2026-Q2. Full year 2026 revenue guidance was raised to $5.09 billion to $5.14 billion, reflecting 6% to 7% organic growth. The trajectory is delivering consistent growth aligned with management's stated priorities.
“Organic constant currency revenue growth of 8% was led by U.S. Pet Health and U.S. Farm Animal each up 11%.”
“Organic constant currency revenue growth of 10% reflects outperformance across our diverse portfolio.”
“Revenue of $1,144 million, increased 12% on a reported basis; 9% in organic constant currency.”
“Elanco delivered significant progress across our strategic priorities of growth, innovation, and cash in 2025.”
This is not a price target or investment advice.
A long-form read on the 1–3 year hold thesis. It updates when the weekly evidence changes.
This is a durable compounder with a focus on increasing revenue growth and improving operating income. The current thesis state indicates a watchful approach due to recent performance slipping, despite strong management execution.
The market appears to be pricing in a durable premium, as evidenced by a valuation that is stretched compared to peers. There is an expectations gap of 0.11, suggesting that investors may have high hopes for future performance.
Fundamentals are likely to show continued revenue growth and margin improvement, as management has consistently prioritized these areas. However, there is a moderate risk due to potential economic headwinds that could impact performance.
The thesis hinges on maintaining guidance and avoiding credibility issues, especially after recent positive earnings. Additionally, the performance of sector bellwethers and broader economic indicators will be crucial in shaping future outcomes.
In the next 1 to 3 years, ELAN's performance will depend on its ability to navigate economic challenges while executing its growth strategies. Not investment advice.
The most important moves since the prior daily snapshot.
Yes, our read has strengthened. The latest earnings beat supports the thesis. Elanco completed a facility expansion for antibody drugs, enhancing growth. There are no new threats to the thesis.
as of 2026-09-04
Review the evidence to watch, what would become a concern, and what would make it less concerning.
Not investment advice. Scores describe historical and current data; they are not forecasts of future returns. Consult a licensed advisor before making investment decisions.