FatCamera Shares of Elanco ( NYSE: ELAN ) have taken a beating, somewhat unexpected I guess. In February, I applauded the company for delivering on a solid divestment in order to address leverage. After a solid first quarter, the company surprised investors with a delay in the pipeline of innovative products, which made investors very cautious as these developments were one of the few green shoots for investors in Elanco.
While this is disappointing, a more than 20% pullback in response to the delay looks like an overreaction, making me willing to increase a modest remaining position again. Elanco - Struggles Long part of Eli Lilly ( LLY ) , which coincidentally have been among the best performing stocks in recent years, Elanco was spun off from its former parent company back in 2018. This followed, and likely was inspired by, the successful spin-off of Zoetis ( ZTS ) by Pfizer ( PFE ) .
The pure play on animal health focused on disease prevention, animal food, therapeutics, among others. A $24 stock at the time of the spin-off saw a massive impact from a multi-billion deal, as the company acquired the Bayer animal health business at a 4.5 times sales multiple on a $1.
7 billion revenue base. Initial enthusiasm on the deal, which as set to boost pro forma EBITDA to over a billion, made that shares traded in the mid-thirties in 2021. Pro forma numbers were never delivered upon, as the combination suffered from lack of growth, even declining sales and margin pressure.
This has w.
