/Zoetis%20Inc%20HQ%20sign-by%20JHVEPhoto%20via%20Shutterstock.jpg)
With a market cap of $77.4 billion, New Jersey-based Zoetis Inc. (ZTS) is the leading animal healthcare company, focusing on livestock and companion animals across various product categories, including vaccines and diagnostics. Catering to cattle, swine, poultry, fish, sheep, dogs, cats, and horses, Zoetis markets directly to veterinarians and livestock producers.
Companies valued at $10 billion or more are generally classified as "large-cap" stocks and Zoetis comfortably fits this criterion, underscoring its strong market presence. Spun off from Pfizer Inc. (PFE) in 2013, the company boasts sustainable growth drivers and opportunities, a diverse and durable portfolio, and a pipeline of medicines, vaccines, diagnostics, and technologies impacting over 100 countries.
However, the animal drug manufacturer is down 16% from its 52-week high of $201.92, achieved on Dec. 14. Shares of Zoetis have dipped marginally over the past three months, underperforming the broader Nasdaq Composite's ($NASX) 10.9% gains over the same time frame.
Over the longer term, ZTS stock plunged 14% on a YTD basis, lagging behind NASX's 19% gains. Moreover, shares of Zoetis have declined marginally over the past 52 weeks, compared to NASX's 30.5% return over the same time frame.
To confirm its bearish price trend, the stock has been trading below its 200-day and 100-day moving averages since mid-March despite some fluctuations.
Zoetis stock fell over 7% on April 12 after a Wall Street Journal report linked the company's arthritis treatments, Librela for dogs and Solensia for cats, to pet illnesses and deaths. These medications, the first antibody drugs for pets approved by the FDA, have prompted thousands of side effect reports in the U.S. and Europe, leading to ongoing regulatory reviews and some veterinarians altering their usage.
Despite its poor price action over the past year, Zoetis continues to innovate and expand globally. Its recent approvals include Valcor™ in Brazil for cattle parasites, Protivity® in the U.K. for Mycoplasma bovis in cattle, and Bonqat® 3 in the U.S. for anxiety in cats. The company also secured U.S. approvals for Synovex Choice® and Synovex® Primer™ for cattle growth, and Excenel® RTU EZ in Japan for cattle diseases. In Canada, Revolution® Plus gained an additional claim for tick control in cats. Zoetis also acquired a manufacturing site in Australia for vaccines and expanded its U.S. distribution center.
Moreover, the animal healthcare company soared 5.5% on May 2 after it announced Q1 earnings results that exceeded Wall Street’s predictions on both the top and bottom lines. Further, Zoetis expects 2024 adjusted EPS to range between $5.71 and $5.81, with revenue projected to be between $9.1 billion and $9.2 billion.
To emphasize the extent of the stock's underperformance, it’s worth noting that while Zoetis’ rival, Elanco Animal Health Incorporated (ELAN), soared by 75.1% over the past 52 weeks and 21.9% on a YTD basis, compared to ZTS’ dips during these periods.
Despite ZTS’s underwhelming price action, analysts are highly optimistic, with a consensus rating of "Strong Buy" from 13 analysts covering the stock. The mean price target of $214.17 suggests a 26.2% upside potential from current price levels.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
