What Happened?
Shares of animal health company Elanco (NYSE:ELAN) jumped 3% in the pre-market session after the company received approval from the European Commission for its canine dermatitis treatment, Zenrelia.
The treatment, Zenrelia, was approved as a once-daily oral medication to treat itching and atopic dermatitis in dogs. This decision by the European Commission represented a significant milestone for Elanco, allowing it to expand its presence in the European canine dermatology market. The company stated the product was expected to be available by the end of the third quarter of 2025. The news followed a recent analyst upgrade from UBS Group, which raised its price target on Elanco shares to $18.00 from $17.00, reiterating a 'buy' rating on the stock.
After the initial pop the shares cooled down to $14.85, up 1.1% from previous close.
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What Is The Market Telling Us
Elanco’s shares are quite volatile and have had 16 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock gained 21.2% on the news that the company reported decent first quarter 2025 results which beat analysts' EPS expectations and included constant currency revenue outperformance. Organic sales were up 4%, thanks to strong demand in cattle health and good traction from new pet meds like Credelio Quattro. Even though sales were flat, operating margins improved, a sign they're managing prices and costs pretty well. On the other hand, its full-year EBITDA guidance missed. Overall, we think this was a decent quarter with some key metrics above expectations.
Elanco is up 23.2% since the beginning of the year, and at $14.85 per share, it is trading close to its 52-week high of $15.47 from August 2024. Investors who bought $1,000 worth of Elanco’s shares 5 years ago would now be looking at an investment worth $696.95.
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