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Parsippany, New Jersey-based Zoetis Inc. (ZTS) discovers, develops, and commercializes animal health medicines, vaccines, and diagnostic products and services. With a market cap of $74.8 billion, Zoetis operates as the largest producer of medicines and vaccines for pets and livestock in the world.
Companies worth $10 billion or more are generally described as “large-cap stock,” Zoetis fits this bill perfectly. Given its extensive operations spanning more than 100 countries across North America, Europe, and internationally, its valuations above this market is unsurprising.
Despite its strengths, Zoetis stock has tanked 16.5% from its 52-week high of $200.33 touched on Sept. 19, 2024. Meanwhile, ZTS has declined 5.2% over the past three months, performing slightly better than ProShares Pet Care ETF’s (PAWZ) 7.4% plunge during the same time frame.
Over the longer term, Zoetis’ performance looks much grimmer. ZTS stock has dropped 8.9% over the past 52 weeks and 11.6% over the past six months, underperforming the PAWZ’s 3.7% uptick over the past year and a 7.9% decline over the past six months.
To confirm the downturn, ZTS has traded below its 50-day moving average since late October 2024 and below its 200-day moving average since early November 2024 with slight fluctuations.
Despite delivering better-than-expected financials, Zoetis stock prices plunged 5.2% after the release of its Q4 results on Feb. 13. Although the company’s livestock-related revenues dipped 2.6% year-over-year to $726 million, it was due to the impact of unfavorable forex translations. Meanwhile, its companion animal-related revenues observed a surge across the American and international markets, growing at 8.4% year-over-year to $1.6 billion. Zoetis’ overall topline increased 4.7% year-over-year to $2.3 billion, exceeding the Street’s expectations. Furthermore, Zoetis’ adjusted net income for the quarter soared 11.1% year-over-year to $632 million and its adjusted EPS of $1.40 surpassed the consensus estimates by 2.2%.
During fiscal 2024, Zoetis revenues jumped by a solid 8.3% year-over-year to $9.3 billion while its adjusted EPS increased 11.3% to $5.92. However, in fiscal 2025, Zoetis expects its revenues to range between $9.2 billion and $9.4 billion, with midpoint guidance indicating no growth in revenues. Meanwhile, its adjusted EPS guidance of $6.00 to $6.10 represents a modest 2.2% growth in earnings at midpoint, which unsettled investor confidence.
On a positive note, Zoetis has outperformed its peer Merck & Co., Inc.’s (MRK) 24% plunge over the past year and a 20.2% decline over the past six months.
Despite the weak guidance analysts remain bullish on ZTS’ prospects. The stock has a consensus “Strong Buy” rating among the 16 analysts covering it. ZTS' mean price target of $209.80 suggests a 25.4% premium to current price levels.
