A key resistance level has emerged in the chart of Elanco Animal Health Inc. (ELAN - Get Rating). If this level is surpassed, a breakout could occur.
ELAN is an animal health company that is engaged in innovating, developing, manufacturing, and marketing products for companion and food animals. It offers a range of food animal products used in cattle, sheep, goats, and swine production.
The company has benefited from secular growth in the animal health industry. It recently acquired Bayer Animal Health to diversify its portfolio and increase its reach. In the most recent quarter, ELAN saw market share gains in their US Pet Health retail business and better than expected performance in China.
ELAN has a healthy balance sheet with a current ratio of 1.7, indicating it has enough liquidity to handle short-term gains. It also has a low debt to equity ratio of 0.7. Sales were up 6.6% over the past year and analysts forecast a revenue gain of 74.7% this quarter.
The stock is trading at a fairly high multiple with a forward P/E of 31.95. While it has shown negative momentum over the past five days, the stock is up almost 10% over the past month.
Take a look at the 1-year chart of ELAN below with added notations:
After hitting a high of $34 back in December, and then declining for several months thereafter, ELAN eventually rallied off its $28 support. However, the stock ended up stalling at the same $34 resistance (red), which is also the 52-week high, again in the beginning of March.
A solid close above that $34 mark should lead to much higher prices for the stock. Therefore, the possible long position in the stock would be on a breakout above that level, with a protective stop placed under it.
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ELAN shares fell $0.13 (-0.42%) in premarket trading Monday. Year-to-date, ELAN has gained 1.08%, versus a 2.66% rise in the benchmark S&P 500 index during the same period.
About the Author: Christian Tharp
I am an expert stock market coach having helped over 4000 beginner and advanced traders & investors from around the world take control of their financial futures. I also write stock market related articles for the Adam Mesh Trading Group and Yolo Publishing. More...
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| Ticker | POWR Rating | Industry Rank | Rank in Industry |
| ELAN | Get Rating | Get Rating | Get Rating |
