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Investing.com -- Leerink Partners upgraded Elanco Animal Health (NYSE:ELAN) to Outperform and downgraded Zoetis (NYSE:ZTS) to Market Perform on diverging growth prospects and shifting dynamics in the animal health market.
Elanco’s price target was raised to $18 from $14.50, with the brokerage pointing to strong early interest in its new U.S. pet health product Credelio Quattro, as well as growing momentum for Zenrelia.
Leerink said its proprietary vet survey and channel checks showed increasing traction in both pet and farm animal segments.
The firm expects Elanco to deliver mid-single-digit sales growth and margin gains over the next few years, supporting mid- to high-teens EPS growth by 2027, among the best in the group despite the stock trading at the lowest multiple.
Conversely, Zoetis’s target was cut to $155 from $180, with Leerink citing growing competition in legacy dermatology and parasiticide categories and a slowdown in momentum for Librela, a key new launch.
While Leerink still expects Zoetis to post revenue and earnings growth, it sees the pace decelerating as rivals like Elanco and Merck (NSE:PROR) gain share.
The firm forecasts Zoetis EPS growth to moderate from high-single-digit to mid-single-digit levels over the next three years.
Leerink said the Elanco upgrade was supported by improved sales and marketing efficiency post-launch, while the Zoetis downgrade was based more on competitive pressures than near-term quarterly results.