Corporate insiders know their companies more intimately than anyone else. If these individuals are buying company stock, it’s often worth taking a closer look.
In this report, we are going to highlight an interesting insider purchase at Elanco Animal Health Inc (ELAN:US). Elanco is a US-based company that develops, manufactures, and markets health products for animals. Its products and services are supplied to farmers, veterinarians, and pet owners in more than 90 countries worldwide. The company is listed on the New York Stock Exchange and currently has a market capitalization of $15.7 billion.
Elanco Animal Health: Insider Buying
Our insider transaction data shows that on 11 May, Elanco’s Chairman David Hoover bought 25,000 shares at a price of $32.34 per share. This purchase cost the insider approximately $811,000. On the same day, board member Art Garcia bought 1,525 shares at a price of $32.88 per share. This purchase cost a total of $50,142.
Previous Trades Were Timed Well
This insider trading activity is worth highlighting for two reasons. Firstly, both insiders have increased their holdings significantly. Our data shows that Hoover’s purchase increased the size of his holding by 56% while Garcia’s purchase increased the size of his holding by 10%. This suggests these insiders are confident the stock is set to move higher.
Secondly, the last time these two insiders purchased stock, it performed very well. In late August last year, we noted that Hoover, Garcia and two other insiders had purchased ELAN stock when it was trading near the $25 level. Since then, it has climbed more than 30% to $33.
Elanco’s first-quarter results beat expectations comfortably. For the period, revenue came in at $1.24 billion, up 89% year on year and ahead of the consensus forecast of $1.16 billion. Meanwhile, adjusted earnings per share came in at 37 cents, significantly above both last year’s figure of 13 cents per share and the consensus forecast of 23 cents per share.
As a result of this performance, Elanco raised and tightened its full year 2021 guidance for revenue, adjusted EBITDA, and adjusted earnings per share. The company said the outlook reflects positive momentum in the business following a strong first quarter of 2021 as well as favorable currency translation now anticipated to provide a $20 to $30 million tailwind.
"Elanco started the year with better than expected results, building on the strong momentum our business has shown since closing the Bayer Animal Health acquisition in August 2020," said President and CEO Jeff Simmons. “We are confident our strengthened and expanded innovation, portfolio, and productivity strategy, or IPP, will continue to drive long-term value creation for shareholders and society," he added.
In light of these results, we see the insider buying here as bullish.