After years of struggling with market share losses and uneven execution, Elanco Animal Health Incorporated (NYSE:ELAN) appears to be turning a corner.
What Happened: Investor meetings hosted by William Blair this week gave analysts enough confidence to upgrade the stock, citing a stabilized core business and promising momentum in its innovation pipeline. With new product launches in both livestock and pet health, Elanco is better positioned for growth—though it still faces stiff competition from larger rivals like Zoetis and Merck.
Analyst Brandon Vazquez said meetings and conversations centered on current momentum and pipeline efforts, giving the confidence to upgrade.
The analyst highlights that the core business (ex-innovation, or about 85% of sales) has stabilized due to improved execution or, bluntly, years of share losses that have made less competitive segments less impactful to the P&L statement.
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The company’s growing lineup of recent launches may also help drive sales of older products over time, Vazquez says.
Why It Matters: These products alone could contribute around five percentage points to overall growth in 2025. William Blair upgraded Elanco’s rating from Market Perform to Outperform.
Recently, the European Medicines Agency’s Committee for Veterinary Medicinal Products granted a positive opinion to Elanco’s Zenrelia (ilunocitinib). The company expects approval and product supply in the market before the end of the third quarter.
The management noted that when new customers start using newer farm animal products like Bovaer and Experior—which currently face little to no competition—it can also increase demand for older products like Rumensin.
William notes that Elanco faces tough competition from big, well-funded companies that are also investing heavily in developing new products.
Competition: Merck & Co Inc’s (NYSE:MRK) JAK inhibitor could affect how well Elanco's drug Zenrelia performs globally. Merck's drug is expected to have fewer safety concerns.
Zoetis Inc (NYSE:ZTS) also has a strong track record of improving existing products, analysts say. That could make it harder for Elanco's new drugs to gain market share.
Price Action: ELAN stock is up 3.05% at $14.18 at the last check on Thursday.
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