Animal Health: Vet visit trends likely to improve in 2023,says JPM; downgrades Elanco

Heska

16/08/2022 11:03

** J.P.Morgan expects veterinary visit trends to improve in
2023 and adds FY22 earnings outlook of most animal health
companies could be achievable
    ** JPM says vet capacity constraints have dominated
investors' conversations for the past several months, with
veterinarians attributing the constraints to staffing challenges
as opposed to lack of demand
    ** While JPM sees near-term pressure for veterinary visits
due to tight labor conditions, brokerage says these trends
should stabilise and improve in 2023 
    ** JPM prefers Zoetis  ZTS.N  as the top pick compared to
other animal health companies like Elanco Animal Health
 ELAN.N , IDEXX  IDXX.O , and Heska  HSKA.O  
    ** Brokerage sees ZTS as largely insulated from vet capacity
constraints with its companion animal business and new launches
set to continue to exceed expectations
    ** JPM downgrades ELAN to "neutral" from "overweight" as co
is seeing more impact than peers from the difficult macro
backdrop 
    ** Compared to peers, ELAN is lagging considering new
product launches in the near-term or pricing power to offset
macro challenges, says JPM; adds these trends will persist in
2023
    ** Within animal health diagnostics, JPM likes both IDXX and
HSKA 
    ** "IDXX holding a dominant position in a diagnostic space
with attractive longer-term fundamentals and HSKA an execution
story with several products rolling out over the next 12 months"
- JPM

 (Reporting by Siddarth S in Bengaluru)
 ((Siddarth.s@thomsonreuters.com;))