Elanco stock gapped higher Wednesday after the pet drugmaker beat Wall Street's first quarter expectations and hiked its profit guidance for the year.
All of this comes amid an uncertain macro and a one- to two-quarter delay for several key drug approvals, William Blair analyst Brandon Vazquez said in a report. Still, for the year, Elanco Animal Health now projects adjusted earnings of 88 cents to 96 cents per share, up a penny from its prior guidance.
"Guidance for the year ticked up and while the magnitude of the raise was not very large, any ability to beat and raise in this uncertain macro environment is a big win for Elanco," he said.
But Elanco narrowed the range of its sales outlook, lowering the midpoint by roughly $8 million. The company now expects $4.46 billion to $4.52 billion in sales, up 2% to 3% in constant currency.
On today's stock market, Elanco stock launched 24.9% to close at 16.89.
Elanco Stock: Earnings, Sales Handily Beat
During the March quarter, Elanco earned an adjusted 34 cents per share on $1.21 billion in sales.
Earning beat both Street projections and Elanco's own outlook, but slid more than 24% year over year. Sales dipped 4%, but topped Elanco stock analysts' call for $1.18 billion and Elanco's guidance for $1.16 billion to $1.19 billion, according to FactSet.
The strength in Elanco's quarter came from its pet health division — a trend set by rival Zoetis earlier in the earnings season. Though sales of Elanco's products for pet skidded 5% in constant currency, $639 million in sales still beat projections for $625 million.
"Strength was driven by a number of factors such as improved supply, new product momentum, improved pricing and stocking benefits, partly offset by a slow start to the U.S. over-the-counter parasiticide season and continued pressure in the U.S. vet channel," William Blair's Vazquez said.
He has a market perform rating on Elanco stock.
Meanwhile, sales in the smaller farm animal space declined 3% to $556 million. But that easily beat analysts' estimate for $545 million. Vazquez noted growth stemmed from new products, but was partially offset by swine market weakness in China.
Elanco stock bounded over its 50-day moving average for the first time since early April.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
