Yahoo Finance Analyst Estimates: Here's What Brokers Think Of Elanco Animal Health Incorporated (NYSE:ELAN) After Its Third-Quarter Report
It's shaping up to be a tough period for Elanco Animal Health Incorporated (NYSE:ELAN), which a week ago released some disappointing third-quarter results that could have a notable impact on how the market views the stock. Revenues missed expectations somewhat, coming in at US$890m, but statutory earnings fell catastrophically short, with a loss of US$0.29 some 38% larger than what the analysts had predicted. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Check out our latest analysis for Elanco Animal Health
Taking into account the latest results, the most recent consensus for Elanco Animal Health from twelve analysts is for revenues of US$4.48b in 2021 which, if met, would be a substantial 54% increase on its sales over the past 12 months. Elanco Animal Health is also expected to turn profitable, with statutory earnings of US$0.23 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$4.54b and earnings per share (EPS) of US$0.36 in 2021. So there's definitely been a decline in sentiment after the latest results, noting the large cut to new EPS forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$31.78, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Elanco Animal Health, with the most bullish analyst valuing it at US$36.00 and the most bearish at US$25.00 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Elanco Animal Health's growth to accelerate, with the forecast 54% growth ranking favourably alongside historical growth of 0.5% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.7% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Elanco Animal Health is expected to grow much faster than its industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Elanco Animal Health. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Elanco Animal Health going out to 2024, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 1 warning sign for Elanco Animal Health that you should be aware of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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