BMO Capital analyst Alex Arfaei initiated Elanco (ELAN) with a Market Perform rating and a price target of $33, saying the company's valuation "overlooks execution uncertainty". The analyst notes that the market assigns Elanco the same multiple as that of Zoetis (ZTS), but sees some "important differences" between the two in terms of growth potential and sales mix, with Elanco having more uncertainty on R&D productivity and core business elements. Arfaei further states that while "noone wants to miss the next Zoetis", gross margin expansion at Elanco will be gradual.