Elanco Animal Health (ELAN) seems "best-positioned name" into the Q2 print, with IDEXX Laboratories (IDXX) appearing to be "more de-risked than compelling" and Zoetis (ZTS) looking safe rather than having a high upside, UBS said in its animal health preview note Monday.
Elanco's accelerating momentum in US pet health segment through May, along with its Credelio Quattro product share gains, support a revenue beat for the quarter and guidance raise, UBS analysts said. They added that solid Q2 results, an increase in revenue for its innovation segment, and a positive outlook for H2 should drive up shares.
For IDEXX, a recurring revenue beat in its companion animal group segment and an increase in placements for inVue product should help drive good results, the analysts said. They stated that stabilization of vet visits plus a clearer product catalyst at the company's Aug. 13 investor day would help boost sentiment on the stock further.
Zoetis looks to have a limited downside currently, but for "meaningful" upside, the company needs a "cleaner" Q2 beat, a guidance reset that inspires more confidence, and more clarity on the pipeline in the next two years, the analysts said.
UBS kept Elanco's stock rating at buy and price target at $31, maintained IDEXX's stock rating at neutral and cut its price target to $620 from $640, and reiterated Zoetis' stock rating at neutral and reduced its price target to $85 from $99.
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