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1. Company Snapshot

1.a. Company Description

Zoetis Inc.discovers, develops, manufactures, and commercializes animal health medicines, vaccines, and diagnostic products in the United States and internationally.It commercializes products primarily across species, including livestock, such as cattle, swine, poultry, fish, and sheep; and companion animals comprising dogs, cats, and horses.


The company also offers vaccines, which are biological preparations to prevent diseases of the respiratory, gastrointestinal, and reproductive tracts or induce a specific immune response; anti-infectives that prevent, kill, or slow the growth of bacteria, fungi, or protozoa; and parasiticides that prevent or eliminate external and internal parasites, which include fleas, ticks, and worms.It also provides other pharmaceutical products that comprise pain and sedation, antiemetic, reproductive, and oncology products; dermatology products for itch associated with allergic conditions and atopic dermatitis; and medicated feed additives, which offer medicines to livestock.In addition, the company provides portable blood and urine analysis testing, including point-of-care diagnostic products, instruments and reagents, rapid immunoassay tests, reference laboratory kits and services, and blood glucose monitors; and other non-pharmaceutical products, including nutritionals and agribusiness services, as well as products and services in areas, such as biodevices, genetics tests, and precision animal health.


It markets its products to veterinarians, livestock producers, and retail outlets, as well as third-party veterinary distributors through its sales representatives, and technical and veterinary operations specialists.The company was founded in 1952 and is headquartered in Parsippany, New Jersey.

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1.b. Last Insights on ZTS

Zoetis Inc.'s recent performance was negatively impacted by disappointing Q3 earnings, driven by weak U.S. results, and a cut in 2025 sales guidance. Librela sales decline, fueled by social media concerns about side effects, also weighed on the stock. Additionally, slowing organic growth, especially in the United States, and macro headwinds affecting pet care spending contributed to the underperformance. The company's valuation has compressed, trading at a historically low P/E of 20, despite a strong product portfolio and robust pipeline.

1.c. Company Highlights

2. Zoetis' Q3 Earnings: Steady Growth Amidst Challenges

Zoetis reported $2.4 billion in revenue for the third quarter, growing 1% on a reported basis and 4% on an organic operational basis, driven by price, while volume was flat. Adjusted net income was $754 million, up 5% on a reported basis and 9% on an organic operational basis. The earnings per share (EPS) came in at $1.7, beating analyst estimates of $1.62. Adjusted gross margins were 71.6%, indicating a stable margin profile. The company's robust financial performance was driven by its diverse portfolio, with the global Companion Animal portfolio posting revenue of $1.7 billion, growing 2% operationally, while the Livestock portfolio grew 10% on an organic operational basis.

Publication Date: Nov -05

📋 Highlights
  • Revenue Growth:: Q3 revenue reached $2.4 billion, with 1% reported growth and 4% organic operational growth driven by pricing, while volume remained flat.
  • Portfolio Performance:: Livestock portfolio grew 10% operationally, outpacing the 2% growth in the Companion Animal portfolio ($1.7 billion revenue).
  • Franchise Highlights:: Simparica revenue rose 7% to $356 million, while OA pain franchise declined 11% operationally to $138 million, prompting strategic interventions.
  • Full-Year Guidance:: Revised organic operational revenue growth to 5.5–6.5% and adjusted net income growth to 5.5–7%, reflecting confidence in pipeline and market trends.
  • Pipeline and Innovation:: Upcoming launches of long-acting OA drugs (Lenivia, Portela) and a December 2 innovation webcast highlight focus on expanding market share and addressing vet education gaps.

Segment Performance

The Simparica franchise contributed $356 million, growing 7%, and Key Dermatology posted $469 million, growing 3%. However, the OA pain franchise declined 11% operationally to $138 million. The company is executing a multipronged strategy to return Librela to growth, which is crucial given the competitive dynamics in the OA pain management market. Notably, the Livestock business demonstrated double-digit growth, driven by sustainable secular trends such as increased demand for protein and population growth.

Guidance and Outlook

For the full year, Zoetis revised and narrowed its organic operational revenue range to 5.5% to 6.5% and its organic operational adjusted net income growth range to 5.5% to 7%. The company has a robust comprehensive pipeline in animal health, advancing care across every category and stage. Analysts estimate next year's revenue growth at 5.9%, and with a current P/E Ratio of 21.21, it is essential to assess whether this growth is already priced in. The company's ROE of 53.21% and ROIC of 22.32% indicate a strong ability to generate returns, justifying a premium valuation to some extent.

Valuation and Conclusion

With a P/S Ratio of 5.88 and an EV/EBITDA of 14.99, the market appears to have already factored in Zoetis' strong growth prospects. However, the company's commitment to innovation, as evident from its upcoming innovation webcast on December 2, is likely to drive long-term growth. The company's diversified portfolio, robust pipeline, and strategic initiatives position it well to navigate challenges and capitalize on opportunities in the animal health market.

3. NewsRoom

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Zoetis Inc. (ZTS) Presents at Piper Sandler 37th Annual Healthcare Conference Transcript

Dec -04

Source: seekingalpha.com

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Zoetis Stock Plummets 24.8% YTD: Here's What You Need to Know

Dec -04

Source: zacks.com

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Zoetis Inc. $ZTS Shares Purchased by Arrowstreet Capital Limited Partnership

Dec -03

Source: defenseworld.net

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Zoetis Inc. (ZTS) Discusses R&D Pipeline Progress and Strategic Vision in Animal Health Innovation Transcript

Dec -02

Source: seekingalpha.com

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Zoetis Highlights R&D Leadership and Long-Term Growth Opportunity at Innovation Webcast

Dec -02

Source: businesswire.com

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Top 15 High-Growth Dividend Stocks For December 2025

Dec -02

Source: seekingalpha.com

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2 Stocks to Buy Near Their 52-Week Lows

Dec -01

Source: fool.com

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Boston Family Office LLC Buys 1,152 Shares of Zoetis Inc. $ZTS

Dec -01

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.93%)

6. Segments

United States (U.S.)

Expected Growth: 5.5%

Zoetis Inc.’s growth is driven by increasing pet ownership, rising demand for animal health products, and expansion into emerging markets, particularly in Latin America and Asia Pacific.

International

Expected Growth: 6.5%

Zoetis’ International segment growth is driven by increasing companion animal health spending, expanding livestock productivity, and growing demand for veterinary vaccines and diagnostics.

Unallocated Contract Manufacturing & Human Health

Expected Growth: 4.5%

Zoetis' unallocated contract manufacturing and human health products are expected to grow driven by increasing demand for outsourced manufacturing services, growth in the human health segment, and the company's expanding portfolio of products and geographies.

7. Detailed Products

Vaccines

Zoetis offers a range of vaccines for livestock, poultry, and companion animals to protect against various diseases.

Parasiticides

Zoetis provides parasiticides to control internal and external parasites in livestock, poultry, and companion animals.

Anti-Infectives

Zoetis offers anti-infective products to treat bacterial, viral, and fungal infections in animals.

Medicated Feed Additives

Zoetis provides medicated feed additives to promote animal health and productivity.

Dermatology Products

Zoetis offers dermatology products to treat skin conditions in companion animals.

Pain Management Products

Zoetis provides pain management products to alleviate pain and discomfort in animals.

Reproductive Health Products

Zoetis offers reproductive health products to improve fertility and reproductive health in animals.

Diagnostics

Zoetis provides diagnostic products and services to detect and monitor diseases in animals.

Genetic Testing

Zoetis offers genetic testing services to identify genetic traits and improve animal breeding.

8. Zoetis Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Zoetis Inc. operates in a highly competitive industry, but the threat of substitutes is moderate due to the company's strong brand recognition and customer loyalty.

Bargaining Power Of Customers

Zoetis Inc. has a diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's products are often essential for animal health, giving it an upper hand in negotiations.

Bargaining Power Of Suppliers

Zoetis Inc. relies on a network of suppliers for raw materials and services. While the company has some bargaining power due to its size, suppliers can still exert some pressure, particularly for specialized or high-demand inputs.

Threat Of New Entrants

The animal health industry has high barriers to entry, including significant research and development costs, regulatory hurdles, and the need for specialized expertise. This limits the threat of new entrants.

Intensity Of Rivalry

The animal health industry is highly competitive, with several established players vying for market share. Zoetis Inc. faces intense competition from companies like Merck Animal Health and Elanco Animal Health.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 56.97%
Debt Cost 5.26%
Equity Weight 43.03%
Equity Cost 8.20%
WACC 6.52%
Leverage 132.38%

11. Quality Control: Zoetis Inc. passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Gilead Sciences

A-Score: 6.5/10

Value: 3.3

Growth: 3.0

Quality: 8.6

Yield: 7.0

Momentum: 9.0

Volatility: 8.3

1-Year Total Return ->

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Merck

A-Score: 5.9/10

Value: 4.8

Growth: 6.2

Quality: 7.8

Yield: 7.0

Momentum: 1.5

Volatility: 8.3

1-Year Total Return ->

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Bristol-Myers Squibb

A-Score: 5.6/10

Value: 5.0

Growth: 3.9

Quality: 6.4

Yield: 8.0

Momentum: 2.0

Volatility: 8.3

1-Year Total Return ->

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CVS Health

A-Score: 5.3/10

Value: 4.6

Growth: 4.0

Quality: 2.6

Yield: 6.0

Momentum: 7.5

Volatility: 7.0

1-Year Total Return ->

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Boston Scientific

A-Score: 5.1/10

Value: 0.9

Growth: 6.6

Quality: 6.7

Yield: 0.0

Momentum: 6.5

Volatility: 9.7

1-Year Total Return ->

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Stock-Card
Zoetis

A-Score: 4.8/10

Value: 1.6

Growth: 6.8

Quality: 7.4

Yield: 2.0

Momentum: 1.5

Volatility: 9.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

118.65$

Current Price

118.65$

Potential

-0.00%

Expected Cash-Flows