Zoetis (ZTS) AI Stock Analysis

• Market Cap: $63.60B
• Dividend Yield: 1.35%
• Average Volume (3M): 2.65M
• Price to Earnings (P/E): 24.7
• Beta (1Y): 0.56
• Revenue Growth: 5.27%
• EPS Growth: 13.72%
• Country: US
• Employees: 13,800
• Sector: Healthcare
• Sector Strength: 45
• Industry: Drug Manufacturers - Specialty & Generic
• EPS (TTM): 1.76
• Shares Outstanding: 443,183,470
• 10 Day Avg. Volume: 3,074,302
• 30 Day Avg. Volume: 2,647,751
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.18
• Enterprise Value/Revenue: 7.97
• Enterprise Value/Gross Profit: 11.39
• Enterprise Value/Ebitda: 18.53
• 1Y Price Target: $189.00
• Price Target Upside: 31.71% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 10

• Rating: 76 Outperform
• Price Target: $173.00 ▲(20.56% Upside)

Zoetis' strong financial performance and positive earnings call are the primary drivers of its overall score. The company's robust profitability, improved balance sheet, and raised guidance underscore its growth potential. However, the neutral technical indicators and moderate valuation suggest a balanced risk-reward profile.

Positive Factors

Revenue Growth

Consistent revenue growth indicates strong market demand and effective strategic execution, supporting long-term business expansion.

Financial Flexibility

The new credit facility enhances financial flexibility, allowing Zoetis to support operations and strategic initiatives, strengthening its competitive position.

Product Leadership

Strong growth in the Simparica franchise underscores Zoetis's leadership in the parasiticide market, driving sustained revenue and market share.

Negative Factors

Librela Adoption Challenges

Challenges in Librela adoption could hinder growth in this segment, affecting revenue and market penetration if not addressed.

U.S. Livestock Revenue Decline

Declining U.S. Livestock revenue highlights potential market challenges, which could impact overall growth if trends persist.

Impact of Tariffs

Tariff impacts introduce uncertainty in financial planning, potentially affecting profitability and strategic decisions in the long term.

Zoetis Business Overview & Revenue Model

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.

How the Company Makes Money

Zoetis generates revenue primarily through the sale of its animal health products, which are categorized into two main segments: livestock and companion animals. The company earns money by selling pharmaceuticals, vaccines, and diagnostic tests, with livestock products typically accounting for a significant portion of its revenue due to the larger market size in agriculture. Additionally, Zoetis benefits from recurring revenues through product refills and ongoing veterinary services. Key revenue streams include sales to veterinarians, animal producers, and pet owners. The company has established significant partnerships with veterinary clinics, animal health distributors, and research institutions, which enhance its market reach and product development capabilities. Factors contributing to its earnings include increasing global demand for animal protein, a growing pet population, and advancements in veterinary care and technology.

Zoetis Financial Statement Overview

Summary

Zoetis exhibits strong financial health with impressive profitability and improved balance sheet metrics. The company has effectively reduced its leverage, enhancing financial stability. While cash flow generation remains robust, the recent decline in free cash flow growth warrants attention.

Income Statement

Zoetis demonstrates strong profitability with a consistent increase in gross profit margin from 68.28% to 71.45% in TTM (Trailing-Twelve-Months). The net profit margin also improved to 27.83%, indicating effective cost management. Revenue growth has been steady, with a notable increase of 6.6% in the latest TTM period. However, the EBIT margin has slightly decreased from 36.28% to 27.52%, suggesting potential pressure on operating efficiency.

Balance Sheet

The company's balance sheet shows a significant reduction in leverage, with the debt-to-equity ratio dropping from 1.95 to 0.04 in TTM, enhancing financial stability. Return on equity remains robust at 53.21%, reflecting strong shareholder returns. The equity ratio has improved, indicating a healthier balance between debt and equity. However, the high historical leverage could pose a risk if not managed carefully.

Cash Flow

Zoetis's cash flow performance is solid, with a high operating cash flow to net income ratio of 0.87 in TTM, indicating efficient cash generation. However, the free cash flow growth rate has turned negative, suggesting potential challenges in maintaining cash reserves. The free cash flow to net income ratio remains healthy at 0.76, showing good cash conversion.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	9.38B	9.26B	8.54B	8.08B	7.78B	6.67B
Gross Profit	6.57B	6.40B	5.83B	5.48B	5.31B	4.46B
EBITDA	4.04B	3.87B	3.69B	3.36B	3.17B	2.69B
Net Income	2.61B	2.49B	2.34B	2.11B	2.04B	1.64B
Balance Sheet
Total Assets	14.48B	14.24B	14.29B	14.93B	13.90B	13.61B
Cash, Cash Equivalents and Short-Term Investments	1.44B	1.99B	2.04B	3.58B	3.48B	3.60B
Total Debt	6.79B	6.74B	6.75B	8.09B	6.74B	7.36B
Total Liabilities	9.50B	9.47B	9.29B	10.52B	9.36B	9.84B
Stockholders Equity	4.98B	4.77B	5.00B	4.41B	4.54B	3.77B
Cash Flow
Free Cash Flow	2.22B	2.30B	1.62B	1.33B	1.74B	1.67B
Operating Cash Flow	2.93B	2.95B	2.35B	1.91B	2.21B	2.13B
Investing Cash Flow	-474.00M	-315.00M	-777.00M	-883.00M	-458.00M	-572.00M
Financing Cash Flow	-2.61B	-2.66B	-3.11B	-904.00M	-1.86B	123.00M

Zoetis Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 143.50
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ZTS, the sentiment is Negative. The current price of 143.5 is below the 20-day moving average (MA) of 148.26, below the 50-day MA of 150.20, and below the 200-day MA of 158.82, indicating a bearish trend. The MACD of -2.71 indicates Positive momentum. The RSI at 36.60 is Neutral, neither overbought nor oversold. The STOCH value of 23.29 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ZTS.

Zoetis Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ZTS	76 Outperform	$63.60B	24.69	52.54%	1.35%	5.27%	13.72%
RDY	74 Outperform	$11.79B	17.78	16.96%	0.64%	13.13%	-0.47%
ELAN	72 Outperform	$9.74B	22.47	6.41%	―	-0.18%	―
PAHC	66 Neutral	$1.57B	32.71	16.89%	1.24%	27.37%	1898.99%
TEVA	58 Neutral	$21.65B	-126.83	-30.46%	―	2.43%	64.37%
VTRS	54 Neutral	$11.10B	-3.27	-3.40%	5.04%	-7.47%	-438.39%
Sector *	51 Neutral	$7.86B	-0.30	-43.30%	2.27%	22.53%	-2.21%

Zoetis Corporate Events

Zoetis Secures New $1.25 Billion Credit Facility

On August 27, 2025, Zoetis Inc. entered into a new five-year $1.25 billion senior unsecured revolving credit facility with a syndicate of banks, replacing its previous credit agreement. This new credit facility allows Zoetis to potentially increase its borrowing capacity to $1.75 billion, providing the company with greater financial flexibility to support its operations and strategic initiatives.

Zoetis Enters Underwriting Agreement for Senior Notes

On August 11, 2025, Zoetis Inc. entered into an Underwriting Agreement for the sale of $850 million in 4.150% Senior Notes due 2028 and $1 billion in 5.000% Senior Notes due 2035. This financial move, executed under an indenture agreement with Deutsche Bank Trust Company Americas, aims to strengthen Zoetis’s financial position and potentially enhance its market competitiveness.