We recently compiled a list of the 10 Best Pet Stocks To Invest In According to Analysts. In this article, we are going to take a look at where Elanco Animal Health Incorporated (NYSE:ELAN) stands against the other pet stocks.
Pet Industry at a Glance
The pet industry is a rapidly growing sector. It was valued at approximately $320 billion in 2023 and is projected to reach nearly $500 billion by 2030, according to Bloomberg Intelligence’s Pet Economy Report. This growth is driven by a rising global pet population and an increasing trend of pet humanization, where owners treat pets as family members and are willing to spend more on their care, including premium food and health services.
The report notes that the US is positioned to remain the largest pet market. In the United States, the market is expected to approach $200 billion by 2030, with significant spending on veterinary care and pet healthcare products.
Ann-Hunter Van Kirk, Bloomberg Intelligence Senior Biopharmaceutical Analyst and co-author of the report, noted that improved pet nutrition is contributing to longer lifespans for pets, which in turn drives up spending on healthcare for aging animals. Analysts expect this trend of increased spending on pet health to continue over the next decade.
Diana Rosero-Pena, Bloomberg Intelligence Consumer Staples Analyst and co-author of the report, highlighted a notable rise in consumer spending on pet products, predicting that the pet food market could grow by more than 50% by 2030.
Shopping Trends Among Pet Owners
In April 2024, Acosta Group released the results of a new study highlighting important insights into pet parents’ shopping habits. With two in three US households owning at least one dog or cat, spending on pet food, treats, and healthcare has become a significant part of household budgets. The study found that 96% of pet parents consider their pets family members, and 86% are willing to adjust their budgets to accommodate their pets’ needs. This presents a valuable opportunity for retailers and brands to target this large audience.
The study also highlighted key preferences among pet parents regarding food choices. 42% prioritize high-protein content for their pets, followed closely by 40% who focus on joint care and 38% who seek probiotics for gut health. Additionally, 36% of pet parents are interested in fresh, minimally processed foods. Brand loyalty plays a significant role in purchasing decisions, with 57% of dog owners and 59% of cat owners sticking to brands they have previously purchased. However, impulse buying is common, especially among millennials, with 58% influenced by in-store promotions. Most pet owners are turning to mass retailers, pet specialty stores, and online retailers for their pet care purchases, indicating a shift in how pet care products are accessed.
Overall, the pet industry remains a vital part of the global economy, driven by strong consumer attachment to pets and an ongoing commitment to their well-being.
Our Methodology
To compile our list of the 10 best pet stocks to invest in according to analysts, we reviewed our own rankings and consulted various online resources. From an initial pool of more than 20 pet stocks, we focused on the top pet stocks that analysts believe have the most potential for growth. We ranked the 10 best pet stocks to buy based on their average price target upside potential according to analysts as of October 29, 2024.
Additionally, we mentioned the hedge fund sentiment surrounding each stock, which was taken from Insider Monkey’s database of 912 elite hedge funds as of Q2 of 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A veterinarian examining a pet in a well-equipped animal clinic.
Elanco Animal Health Incorporated (NYSE:ELAN)
Average Price Target Upside Potential According to Analysts: 55.88%
Number of Hedge Fund Holders: 44
Elanco Animal Health Incorporated (NYSE:ELAN) is an animal health company that primarily focuses on developing medicines and vaccines for pets and livestock. In the second quarter of 2024, Elanco emphasized its commitment to innovation, highlighting the upcoming commercial activities for Bovaer after the FDA review in May. The company expects to launch significant products in the next three quarters.
On October 7, 2024, Elanco Animal Health Incorporated (NYSE:ELAN) announced that it has received FDA approval for Credelio Quattro, a comprehensive oral parasiticide for dogs that protects against six types of parasites. Additionally, on September 19, 2024, the company announced that Zenrelia was approved by the FDA. Zenrelia is an effective treatment for pruritus or itching associated with allergic dermatitis and control of atopic dermatitis in dogs.
The company is focused on strengthening its financial position and expanding its product offerings. In 2024, Elanco Animal Health Incorporated (NYSE:ELAN) successfully repaid $1.3 billion in debt so far, thanks to improved operating cash flow and proceeds from the sale of its Aqua business. The company expects its net leverage to be around the mid-4x level by year-end, which reflects a significant reduction in debt and a commitment to financial health. Elanco Animal Health Incorporated (NYSE:ELAN) projects organic revenue growth of 3% to 4% for the full year, driven by a solid base business and contributions from innovative products.
Analysts are also bullish on ELAN. The 1-year median price target of $19.50 set by analysts indicates a potential upside of 55% from current levels.
As of the second quarter of 2024, Elanco Animal Health Incorporated (NYSE:ELAN) was held by 44 hedge funds, according to Insider Monkey’s database.
Overall, ELAN ranks 1st on our list of the best pet stocks to invest in according to analysts. While we acknowledge the potential of ELAN as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ELAN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
