What Happened?

Shares of animal health company Elanco (NYSE: ELAN) jumped 8.2% in the morning session after the company reported fourth-quarter results that surpassed Wall Street's expectations, with investors focusing on strong current performance over a mixed outlook for 2026. For the quarter, 

Elanco posted revenue of $1.14 billion, up 12.2% year-on-year, and beat analyst estimates. The company also reported adjusted earnings of $0.13 per share, which was higher than the consensus of $0.11. Looking ahead, the company's guidance for the next quarter's revenue was slightly above expectations. However, the full-year forecast was mixed, with adjusted earnings per share guidance in line with estimates while EBITDA guidance fell short of projections. The positive stock reaction suggests the strong quarterly beat outweighed concerns about the future outlook.

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What Is The Market Telling Us

Elanco’s shares are somewhat volatile and have had 12 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 10 months ago when the stock gained 21.2% on the news that the company reported decent first quarter 2025 results which beat analysts' EPS expectations and included constant currency revenue outperformance. 

Organic sales were up 4%, thanks to strong demand in cattle health and good traction from new pet meds like Credelio Quattro. Even though sales were flat, operating margins improved, a sign they're managing prices and costs pretty well. On the other hand, its full-year EBITDA guidance missed. Overall, we think this was a decent quarter with some key metrics above expectations.

Elanco is up 18.8% since the beginning of the year, and at $26.76 per share, has set a new 52-week high. Investors who bought $1,000 worth of Elanco’s shares 5 years ago would now be looking at an investment worth $848.05.

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