Elanco’s first quarter delivered results ahead of market expectations, driven by momentum in both its innovation pipeline and farm animal portfolio. Management highlighted strong contributions from recently launched products, especially within its “Big 6” innovation portfolio, and robust growth in the U.S. cattle segment. CEO Jeffrey Simmons emphasized, “This strong Q1 performance represents our seventh quarter of underlying growth,” noting the balanced impact of both price and volume. The company also overcame a challenging U.S. retail environment early in the quarter, with sales rebounding in March and April as seasonal demand for pet health products improved.
Is now the time to buy ELAN? Find out in our full research report (it’s free).
Elanco (ELAN) Q1 CY2025 Highlights:
- Revenue: $1.19 billion vs analyst estimates of $1.16 billion (flat year on year, 2.4% beat)
- Adjusted EPS: $0.37 vs analyst estimates of $0.30 (21.5% beat)
- Adjusted EBITDA: $276 million vs analyst estimates of $251.1 million (23.1% margin, 9.9% beat)
- The company lifted its revenue guidance for the full year to $4.55 billion at the midpoint from $4.48 billion, a 1.5% increase
- Management reiterated its full-year Adjusted EPS guidance of $0.83 at the midpoint
- EBITDA guidance for the full year is $850 million at the midpoint, below analyst estimates of $861.6 million
- Operating Margin: 9.4%, up from 7.2% in the same quarter last year
- Constant Currency Revenue rose 4% year on year (-4% in the same quarter last year)
- Market Capitalization: $7.10 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Elanco’s Q1 Earnings Call
- Jonathan Block (Stifel) asked about the cadence of operating expense investments and leverage as product launch spending peaks in Q2. CFO Todd Young explained that higher first-half spending supports launches during the peak season, with anticipated revenue lift in the back half of the year.
- Michael Ryskin (Bank of America) probed why innovation revenue guidance was not raised more, given a strong Q1. CEO Jeffrey Simmons attributed this to a balanced approach, noting launch mode seasonality and a desire not to get ahead of execution.
- Andrea Alfonso (UBS) inquired about Zenrelia’s adoption rates and the relative contribution of Zenrelia versus Quattro to the innovation guidance raise. Simmons highlighted Zenrelia’s growing clinic adoption and emphasized that the full portfolio of innovations, not just individual products, is driving the guidance increase.
- Ekaterina Knyazkova (JPMorgan) questioned tariff mitigation and the feasibility of offsetting costs through pricing. Simmons stated that price increases are being deployed selectively and that the company’s global manufacturing footprint provides additional flexibility.
- Erin Wright (Morgan Stanley) sought clarification on distributor stocking dynamics with new product launches. Young clarified that initial stocking for Credelio Quattro was met with repeat distributor orders, suggesting strong demand rather than front-loaded inventory build.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will be watching (1) the pace of adoption and revenue contribution from new products, particularly Credelio Quattro and Zenrelia, (2) evidence that tariff mitigation strategies are effective without eroding margins, and (3) continued progress toward deleveraging targets through cash flow generation and asset monetization. The evolution of regulatory pathways for Zenrelia and potential label changes will also be closely monitored as additional growth drivers.
Elanco currently trades at $14.29, up from $9.51 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).
The Best Stocks for High-Quality Investors
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
