With the business potentially reaching an important milestone, we decided to take a closer look. Elanco Animal Health, Inc. (NYSE:ELAN) Future Outlook. Elanco Animal Health, Inc., an animal health company, innovates, develops, manufactures, and sells products for companion animals and livestock. The $6.4 billion market cap company lost $1.2 billion in its most recent fiscal year and $1.3 billion in the trailing 12 months, widening the gap between loss and breakeven. Since Elanco Animal Health investors are concerned about its path to profitability, we decided to gauge market sentiment. We’ve compiled a summary of industry analysts’ expectations for the company, its breakeven year, and estimated growth rate.
Check out our latest analysis for Elanco Animal Health
The consensus of 10 US pharmaceutical industry analysts is that Elanco Animal Health is close to breaking even. Analysts expect the company to post a final loss in 2024 and a profit of $87 million in 2025. This means the company is projected to break even just over a year from now. How fast would the company need to grow each year to break even by 2025? Working backwards from analysts’ forecasts, the company is expected to grow at an average rate of 90% year over year, which is quite optimistic. If this growth rate is too aggressive, the company could become profitable much slower than analysts expect.
As this is an overview, we won’t go into the specifics of Elanco Animal Health’s upcoming projects, but note that pharmaceuticals in general have irregular periods of cash flow depending on the stage of product development. This means that high growth rates are not uncommon, especially if the company is currently in an investment period.
One final issue is worth mentioning: Elanco Animal Health currently has relatively high levels of debt. Generally, the rule of thumb is that debt should not exceed 40% of equity, but in Elanco Animal Health’s case it is 95%. Higher debt levels require stricter capital management and increase the risk of investing in a loss-making company.
Next steps:
This article is not intended to be a comprehensive analysis of Elanco Animal Health – if you would like a deeper understanding of the company, please see Elanco Animal Health’s company page on Simply Wall St. We’ve also compiled a list of related matters worth noting.
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evaluation: What is Elanco Animal Health worth today? Is the potential for future growth already priced into the price? The intrinsic value infographic from our free research report helps you visualize whether Elanco Animal Health is currently undervalued by the market.
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Management TeamWith an experienced management team at the helm, we believe in our business. View biographies of Elanco Animal Health’s board members and CEO.
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Other high-performing stocks: Are there other stocks with proven track records and better prospects? See our free list of these great stocks here.
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This article by Simply Wall St is general in nature. We use only unbiased methodologies to provide commentary based on historical data and analyst forecasts, and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks, and does not take into account your objectives, or your financial situation. We seek to provide long-term focused analysis driven by fundamental data. Note that our analysis may not take into account the latest price sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned.
Have feedback about this article? Concerns about the content? Contact us directly. Or email us at editorial-team@simplywallst.com
