On Monday, Piper Sandler adjusted its price target for Elanco Animal Health shares (NYSE:NYSE:ELAN), lifting it to $19 from $18, while keeping a Neutral rating on the stock. The firm revised its revenue and adjusted earnings per share (EPS) estimates for the coming years, citing updated projections.
The stock price target increase reflects the firm's new estimates for Elanco's future financial performance. For the year 2024, the firm now expects revenue of $4.501 billion and an adjusted EPS of $0.94, a slight increase from the previous forecast of $4.470 billion in revenue and $0.88 EPS. These figures are in line with the consensus estimates of $4.500 billion in revenue and $0.93 EPS.
Looking ahead to 2025, Piper Sandler's revised estimates show revenue potentially reaching $4.666 billion with an adjusted EPS of $1.02, up from the earlier projections of $4.633 billion in revenue and $0.96 EPS. This is slightly below the consensus of $4.684 billion in revenue and $1.07 EPS.
For 2026, the firm has increased its revenue estimate to $4.992 billion from $4.957 billion and adjusted EPS to $1.16 from $1.09. This forecast is more optimistic compared to the consensus, which anticipates $4.880 billion in revenue and an EPS of $1.17.
The justification for the new $19 stock price target is based on a 3.2 times enterprise value to sales multiple applied to the firm's 2025 revenue estimate. This multiple remains unchanged; however, it represents approximately a 10% discount to Elanco's historical average trading multiple.
Piper Sandler believes a fair trading multiple for Elanco should be slightly lower than its historical averages, considering the company's IPO was in 2018 and the high comparative valuations from a historical perspective during much of the time since. The revised price target also takes into account the company's net debt of $5.420 billion and 496 million shares outstanding.
InvestingPro Insights
In light of Piper Sandler's updated price target for Elanco Animal Health (NYSE:ELAN), it's beneficial to consider additional insights that InvestingPro provides. According to InvestingPro data, Elanco currently has a market capitalization of $8.46 billion and a Price to Book ratio of 1.4 as of Q1 2024. Despite a slight revenue decline over the last twelve months, the company has managed a gross profit margin of 55.33%, showcasing its ability to maintain profitability at the gross level.
InvestingPro Tips suggest that while analysts have revised their earnings downwards for the upcoming period, there is an expectation for net income growth this year. Moreover, Elanco's liquid assets exceed its short-term obligations, indicating a strong liquidity position. Notably, Elanco has experienced a significant return over the last week, with a 28.21% price total return, and a robust 98.37% return over the last year, trading near its 52-week high.
For investors looking to delve deeper into Elanco's financial health and future prospects, InvestingPro offers a range of additional tips. In fact, there are 11 more tips available on InvestingPro, which could provide valuable context and guidance for investment decisions. To gain access to these insights, readers might consider using the coupon code PRONEWS24 for an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
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