Value
5.3/10data confidence 83%| Component | Sub-score |
|---|---|
| P/S | 8.7 |
| EV/EBITDA | 2.2 |
| Fwd P/E | 6.4 |
| PEG | 3.1 |
| Analyst target | 6.0 |
- ▸Forward P/E: 20.2x
- ▸PEG: 4.04
ELAN · Why this verdict
Why Elanco Animal Health Incorporat (ELAN) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score4.8/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
The company has delivered four consecutive quarterly earnings beats averaging a 25% positive surprise, and technical indicators confirm a constructive breakout — golden cross, RSI 60, MACD bullish — but the current price offers only 6.7% upside against materially larger downside, and the reward-to-risk ratio at approximately 0.5-to-1 falls well short of the minimum threshold needed to justify entering a new position despite the otherwise attractive fundamental signals.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The company has beaten analyst consensus EPS estimates in each of the last four quarters, with an average positive surprise of roughly 25%, pointing to a pattern of expectations being set below what the business can deliver. Earnings | Earnings beats continue for at least 2 more consecutive quarters with positive EPS surprise exceeding 10%. | →Stable |
| CounterThe growth profile remains below average and business quality screens below the sector median — a beat streak built on low consensus estimates can reverse quickly if analysts raise their bars following four successive positive surprises. | ||
The stock has established a golden cross, trades above all key moving averages, carries an RSI of 60, and shows a bullish MACD alongside rising on-balance volume — a technically constructive configuration that supports continuation of the recent uptrend. V9 | Stock remains above the 200-day moving average for at least 3 consecutive months with RSI sustaining above 55. | →Stable |
| CounterThe stock's beta exceeds 1.7, meaning it amplifies broad market moves in both directions — a constructive chart pattern in a high-beta name can reverse sharply on any sector or macro rotation, and elevated implied volatility of 86% signals the market is pricing in substantial future price swings. | ||
Short interest stands at 11% of float, indicating meaningful institutional skepticism about the stock's near-term prospects — an overhang that can suppress price moves or amplify reversals in either direction. Risk breakdown | If this risk resolves, short interest would fall below 5% of float over the next 2 quarters. | →Stable |
| CounterElevated short interest combined with strong earnings beats can fuel sharp upside if shorts are forced to cover — the same overhang that creates risk also embeds a potential catalyst that could accelerate gains on the next positive earnings event. | ||
With only 6.7% upside to the analyst price target against 15% of downside, the reward-to-risk ratio sits at approximately 0.5-to-1 — well below the minimum threshold for a new position, regardless of the quality of the underlying fundamental and technical signals. Price targets | If the risk/reward improves, upside to target would expand beyond 15% and the reward-to-risk ratio would exceed 1.5. | →Stable |
| CounterAnalyst targets can be revised upward following continued earnings beats — if two more strong beats arrive, consensus targets may step up enough to widen the upside window materially from the current 6.7%. | ||
The company has beaten analyst consensus EPS estimates in each of the last four quarters, with an average positive surprise of roughly 25%, pointing to a pattern of expectations being set below what the business can deliver.
→StableEarnings
- Expectation
- Earnings beats continue for at least 2 more consecutive quarters with positive EPS surprise exceeding 10%.
CounterThe growth profile remains below average and business quality screens below the sector median — a beat streak built on low consensus estimates can reverse quickly if analysts raise their bars following four successive positive surprises.
The stock has established a golden cross, trades above all key moving averages, carries an RSI of 60, and shows a bullish MACD alongside rising on-balance volume — a technically constructive configuration that supports continuation of the recent uptrend.
→StableV9
- Expectation
- Stock remains above the 200-day moving average for at least 3 consecutive months with RSI sustaining above 55.
CounterThe stock's beta exceeds 1.7, meaning it amplifies broad market moves in both directions — a constructive chart pattern in a high-beta name can reverse sharply on any sector or macro rotation, and elevated implied volatility of 86% signals the market is pricing in substantial future price swings.
Short interest stands at 11% of float, indicating meaningful institutional skepticism about the stock's near-term prospects — an overhang that can suppress price moves or amplify reversals in either direction.
→StableRisk breakdown
- Expectation
- If this risk resolves, short interest would fall below 5% of float over the next 2 quarters.
CounterElevated short interest combined with strong earnings beats can fuel sharp upside if shorts are forced to cover — the same overhang that creates risk also embeds a potential catalyst that could accelerate gains on the next positive earnings event.
With only 6.7% upside to the analyst price target against 15% of downside, the reward-to-risk ratio sits at approximately 0.5-to-1 — well below the minimum threshold for a new position, regardless of the quality of the underlying fundamental and technical signals.
→StablePrice targets
- Expectation
- If the risk/reward improves, upside to target would expand beyond 15% and the reward-to-risk ratio would exceed 1.5.
CounterAnalyst targets can be revised upward following continued earnings beats — if two more strong beats arrive, consensus targets may step up enough to widen the upside window materially from the current 6.7%.
Per-dimension breakdown
Quality
4.6/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.0 |
| ROA | 1.0 |
| Gross margin | 7.0 |
| Op margin | 4.9 |
| Net margin | 0.0 |
| Current ratio | 7.5 |
| FCF quality | 6.0 |
| Moat | 6.5 |
| Piotroski F | 8.9 |
- ▸FCF-positive but moderate margins (FCF margin 14%, FCF yield 5.8%)
- ▸Strong Piotroski F-Score: 8/9
Growth
3.1/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 6.2 |
| EPS growth | 0.0 |
Momentum
3.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 3.5 |
| OBV | 1.0 |
| MA position | 9.0 |
| Volume | 0.0 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 8.6 |
| Price target | 8.0 |
| erm sentiment | 5.1 |
- ▸Analyst upside: 23%
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.0 |
- ▸Negligible insider buying — $199,781 (0.002% of mkt cap)
Peer rank
3.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 5.0 |
| quality rank | 1.5 |
| growth rank | 7.4 |
Technical
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 2.9 |
| support resistance | 5.4 |
| 52w position | 7.6 |
| gap | 5.0 |
Risk (lower is worse)
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 4.7 |
| days to cover | 6.2 |
| volatility | 2.2 |
| put call | 10.0 |
| implied vol | 3.9 |
| max pain risk | 7.0 |
| beta | 4.3 |
| debt equity | 7.0 |
Catalyst
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:42d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:3.8<4.5
- ASYMMETRY:0.8<1.5@spot
Warning (0)
none
Reward-to-Risk
0.81
Upside
+6.7%
Downside
8.3%
Sizing output
AVOID
SetupUNKNOWN — No clear chart pattern; technical signals are mixed
EdgeNO_EDGE — No clear edge identified
SuitabilityAGGRESSIVE — Beta 1.70>1.3
Investment implication
The F-path SELL output reflects an overall score of 4.8 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Catalyst at 7.5) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:3.8<4.5, ASYMMETRY:0.8<1.5@spot) reinforce the read. Current asymmetry R:R is 0.81 — supplementary context, not the trigger for this path.
The strongest dimensions are Catalyst at 7.5, Sentiment at 7.4, and Risk (lower is worse) at 5.7; the weakest are Growth at 3.1, Peer rank at 3.5, and Momentum at 3.8. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of 0.81 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1The company has beaten analyst consensus EPS estimates in each of the last four quarters, with an average positive surprise of roughly 25%, pointing to a pattern of expectations being set below what the business can deliver.
Trip ifAverage EPS surprise falls below 0% for 2 consecutive quarters.
- P2The stock has established a golden cross, trades above all key moving averages, carries an RSI of 60, and shows a bullish MACD alongside rising on-balance volume — a technically constructive configuration that supports continuation of the recent uptrend.
Trip ifStock price falls below the 200-day moving average and RSI drops below 45 for 4 consecutive weeks.
- P3Short interest stands at 11% of float, indicating meaningful institutional skepticism about the stock's near-term prospects — an overhang that can suppress price moves or amplify reversals in either direction.
Trip ifShort interest falls below 5% of float for 2 consecutive months.
- P4With only 6.7% upside to the analyst price target against 15% of downside, the reward-to-risk ratio sits at approximately 0.5-to-1 — well below the minimum threshold for a new position, regardless of the quality of the underlying fundamental and technical signals.
Trip ifUpside to analyst price target expands beyond 15% with a reward-to-risk ratio exceeding 1.5.