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With a market cap of $77.6 billion, Zoetis Inc. (ZTS) is a global leader in animal health, specializing in the discovery, development, and commercialization of medicines, vaccines, and diagnostics for both livestock and companion animals. With a diverse product portfolio spanning parasiticides, anti-infectives, dermatology, and medicated feed additives, the company serves veterinarians, livestock producers, and pet owners worldwide.
Shares of the animal health company have underperformed the broader market over the past 52 weeks. ZTS has decreased 12.9% over this time frame, while the broader S&P 500 Index ($SPX) has gained 20.7%. However, ZTS stock has risen 5.5% on a YTD basis, outperforming SPX's 3.1% YTD gain.
Looking closer, the Parsippany, New Jersey-based company has lagged behind the Health Care Select Sector SPDR Fund's (XLV) 1.6% rise over the past 52 weeks and a 6.4% YTD gain.
Zoetis reported strong Q3 2024 financial results on Nov. 4, with adjusted EPS of $1.58 and total revenue of $2.4 billion, both surpassing the expectations. The impressive performance was driven by strong sales of companion animal products, particularly Librela and Solensia for osteoarthritis pain in pets, as well as the continued success of Simparica Trio and key dermatology treatments like Apoquel and Cytopoint. Additionally, Zoetis raised its 2024 guidance, projecting adjusted EPS of $5.86 - $5.92 and revenue of $9.2 billion - $9.3 billion. But, the stock fell 3.7% on that day.
For fiscal 2024, which ended in December, analysts expect ZTS’ EPS to grow 10.9% year-over-year to $5.90. The company’s earnings surprise history is mixed. It beat the consensus estimates in three of the last four quarters while missing on another occasion.
Among the 16 analysts covering the stock, the consensus rating is a “Strong Buy.” That’s based on 14 “Strong Buy” ratings, one “Moderate Buy,” and one “Hold.”
On Jan. 27, Bank of America Securities analyst Michael Ryskin reiterated a “Buy” rating on Zoetis and set a price target of $205.
As of writing, ZTS is trading below the mean price target of $215. The Street-high price target of $243 implies a modest potential upside of 41.4% from the current price levels.
