Zoetis (ZTS) AI Stock Analysis

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Zoetis

(NYSE:ZTS)

77Outperform

Zoetis exhibits strong financial performance and promising growth prospects as highlighted in its earnings call. However, technical analysis suggests potential downside risks, and valuation metrics indicate the stock is fairly priced. The company's commitment to dividends is a positive signal for investors.

Positive Factors

Growth Potential

Analyst reiterates a BUY rating for Zoetis, highlighting confidence in the company's growth potential.

Market Position

Zoetis is viewed as a market leader in an industry with durable secular growth drivers, reinforcing the positive outlook.

Product Performance

Zoetis' top 5, top 10, and top 20 products showed over 20% year-over-year growth, indicating success beyond just a few offerings.

Negative Factors

Financial Guidance

The FY25 guidance for adjusted EPS is slightly below Street expectations due to unaccounted FX headwinds and other non-operating items.

Revenue Impact

The divestiture of ZTS' medicated feed additives and water business is expected to lower revenue and adjusted EPS estimates for 2025 and 2026.

Sales Performance

Revenue from all other product sales was down roughly 4% year-over-year, outside of the top 10 products.

Zoetis (ZTS) vs. S&P 500 (SPY)

Market Cap

$69.43B

Dividend Yield1.18%

Average Volume (3M)2.67M

Price to Earnings (P/E)28.5

Beta (1Y)0.66

Revenue Growth8.33%

EPS Growth7.70%

CountryUS

Employees13,800

SectorHealthcare

Sector Strength57

IndustryDrug Manufacturers - Specialty & Generic

Share Statistics

EPS (TTM)5.46

Shares Outstanding446,060,900

10 Day Avg. Volume2,206,732

30 Day Avg. Volume2,666,239

Financial Highlights & Ratios

PEG Ratio3.70

Price to Book (P/B)N/A

Price to Sales (P/S)0.00

Price to Cash Flow (P/CF)0.00

P/FCF Ratio0.00

Enterprise Value/Market Cap1.13

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit11.98

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$202.11

Price Target Upside28.37% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering9

Zoetis Business Overview & Revenue Model

Company DescriptionZoetis 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 MoneyZoetis makes money primarily through the sale of its extensive range of veterinary medicines and vaccines, which constitute a significant portion of its revenue. These products cater to both livestock and companion animals, addressing various health needs and fostering better health outcomes. Key revenue streams include sales of parasiticides, vaccines, anti-infectives, and dermatology products. Zoetis also generates income from its diagnostic products and genetic tests, which are used by veterinarians to identify and manage animal health issues more effectively. The company benefits from strong partnerships with veterinary clinics, agricultural producers, and research institutions, which help drive product sales and adoption. Additionally, Zoetis invests in research and development to continually innovate and expand its product offerings, ensuring sustained revenue growth. The company's global reach and strong distribution networks further enhance its market presence and financial performance.

Zoetis Key Performance Indicators (KPIs)

Any

Revenue by Segment

Revenue by Segment
Highlights income from different business areas, indicating which segments drive growth and profitability, and where strategic focus may be needed.

Chart InsightsZoetis' Companion Animal segment shows robust growth, driven by the Simparica franchise and osteoarthritis pain products like Librela, achieving a 14% operational increase. Despite foreign exchange challenges, the Livestock segment exceeded expectations with a 5% operational growth, highlighting resilience. The company anticipates continued above-market growth in 2025, fueled by innovation and strategic investments, though it faces competitive pressures, especially in dermatology. This strategic focus on innovation and market expansion positions Zoetis well for sustained growth despite external headwinds.

Data provided by:

Main Street Data

Zoetis Financial Statement Overview

Summary

Zoetis demonstrates robust financial health with strong income and cash flow metrics, such as a 26.86% net profit margin and significant cash flow growth. The balance sheet is stable with low leverage, though liabilities need monitoring.

Income Statement

Very Positive

Zoetis has demonstrated strong performance in its income statement metrics. The gross profit margin is consistently high at 100% in 2024. The net profit margin in 2024 stands at 26.86%, showcasing effective cost management and profitability. Revenue growth has been robust with a 8.34% increase in 2024 from the previous year, indicating healthy business expansion. EBIT margin is also impressive at 67.53% in 2024, reflecting efficient operations.

Balance Sheet

Positive

The balance sheet highlights a solid financial structure with a debt-to-equity ratio of 0.036 in 2024, which is exceptionally low and indicates low leverage. The equity ratio is 33.50%, showing a moderate reliance on equity in the company's capital structure. However, although the return on equity (ROE) is strong at 52.11%, the company's total liabilities remain significant, which could pose risks if not managed carefully.

Cash Flow

Very Positive

Zoetis has a strong cash flow position, with a free cash flow growth rate of 41.79% in 2024, showcasing effective cash management and potential for reinvestment. The operating cash flow to net income ratio is 1.19, indicating strong cash generation capabilities relative to net income. The free cash flow to net income ratio of 0.92 reflects a healthy conversion of income to cash.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
9.26B	8.54B	8.08B	7.78B	6.67B
	Gross Profit
6.54B	5.83B	5.63B	5.47B	4.62B
	EBIT
6.25B	3.07B	2.89B	2.75B	2.29B
	EBITDA
3.85B	3.69B	3.36B	3.17B	2.69B
	Net Income Common Stockholders
2.49B	2.34B	2.11B	2.04B	1.64B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.99B	2.04B	3.58B	3.48B	3.60B
	Total Assets
14.24B	14.29B	14.93B	13.90B	13.61B
	Total Debt
6.74B	6.75B	8.09B	6.74B	7.36B
	Net Debt
4.76B	4.72B	4.51B	3.26B	3.76B
	Total Liabilities
9.47B	9.29B	10.52B	9.36B	9.84B
	Stockholders Equity
4.77B	5.00B	4.41B	4.54B	3.77B
Cash Flow		Free Cash Flow
2.30B	1.62B	1.33B	1.74B	1.67B
	Operating Cash Flow
2.95B	2.35B	1.91B	2.21B	2.13B
	Investing Cash Flow
-315.00M	-777.00M	-883.00M	-458.00M	-572.00M
	Financing Cash Flow
-2.66B	-3.11B	-904.00M	-1.86B	123.00M

Zoetis Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price157.44

Price Trends

50DMA

158.83

Negative

100DMA

163.13

Negative

200DMA

172.85

Negative

Market Momentum

MACD

-0.71

Negative

RSI

55.13

Neutral

STOCH

85.96

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ZTS, the sentiment is Neutral. The current price of 157.44 is above the 20-day moving average (MA) of 150.88, below the 50-day MA of 158.83, and below the 200-day MA of 172.85, indicating a neutral trend. The MACD of -0.71 indicates Negative momentum. The RSI at 55.13 is Neutral, neither overbought nor oversold. The STOCH value of 85.96 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for ZTS.

Zoetis Risk Analysis

Zoetis disclosed 47 risk factors in its most recent earnings report. Zoetis reported the most risks in the “Tech & Innovation” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Zoetis Peers Comparison

Overall Rating

UnderperformOutperform

Sector (52)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ZTS	77 Outperform	$69.43B	28.48	50.91%	1.18%	8.33%	7.70%
RDY	77 Outperform	$11.65B	18.19	18.51%	0.58%	13.26%	1.33%
ELAN	65 Neutral	$4.84B	14.37	5.49%	―	0.50%	―
HCM	63 Neutral	$2.70B	69.41	5.06%	―	-25.48%	-63.36%
PAHC	58 Neutral	$789.01M	40.92	7.46%	2.58%	12.63%	30.51%
VTRS	52 Neutral	$10.26B	―	-3.24%	5.67%	-4.58%	-1269.23%
Sector *	52 Neutral	$5.35B	3.96	-42.60%	2.86%	17.58%	1.27%

* Healthcare Sector Average

Performance Comparison

ZTS

Zoetis

157.44

-6.67

-4.06%

RDY

Dr Reddy's Laboratories

14.00

-0.90

-6.04%

VTRS

Viatris

8.65

-2.67

-23.59%

PAHC

Phibro Animal Health

19.48

3.41

21.22%

HCM

HUTCHMED

15.00

-4.82

-24.32%

ELAN

Elanco Animal Health

9.75

-3.51

-26.47%

Zoetis Earnings Call Summary

Earnings Call Date:Feb 13, 2025

(Q4-2024)

% Change Since: -9.15%|

Next Earnings Date:May 06, 2025

Earnings Call Sentiment Positive

Zoetis reported strong financial performance with significant growth in key product segments, particularly in companion animals and dermatology. Despite facing headwinds from foreign exchange and increased competition, the company remains confident in its ability to sustain above-market growth driven by innovation and strategic investments.

Q4-2024 Updates

Positive Updates

Record-Breaking Revenue and Growth

Zoetis reported $9.3 billion in revenue for 2024, growing 8% on a reported basis and 11% operationally. Adjusted net income grew 10% on a reported basis and 15% operationally to $2.7 billion.

Strong Performance in Companion Animal Portfolio

Companion animal portfolio grew 14% operationally. The Simparica franchise posted $1.4 billion in revenue, growing 28% operationally, and Librela and Solensia reported combined revenue of $581 million globally, growing 80% operationally.

Dermatology Franchise Growth

Dermatology franchise grew 17% operationally, generating $1.6 billion in revenue. Significant market expansion opportunities with 20 million untreated or undertreated dogs.

Livestock Portfolio Exceeds Expectations

Livestock portfolio delivered 5% operational revenue growth, exceeding initial expectations of 2% to 4% annual industry growth, with 7% growth on an organic operational basis.

Successful Product Launches

Librela's US launch became the most successful in Zoetis' history, reaching blockbuster status in less than four quarters.

Negative Updates

Foreign Exchange Headwinds

The strengthening US dollar throughout 2024 posed a $250 million headwind to revenue and a $50 million headwind to adjusted net income.

Challenges in Livestock Segment

The US livestock business declined 1% due to the MFA divestiture, although organic operational growth was 6%.

Impact of Competition

The company faces potential headwinds from competition, particularly in the dermatology market, with new entrants expected in the second half of 2025.

Company Guidance

During the Zoetis fourth quarter and full-year 2024 earnings call, the company reported robust performance metrics, achieving double-digit operational revenue growth of 11%, with the U.S. market seeing an 11% increase and international markets growing by 10% operationally. The companion animal portfolio led the way with 14% operational growth, while the livestock segment grew by 5% operationally. The Simparica franchise, a key driver, grew 28% operationally, and the osteoarthritis pain franchises, including Librela, saw an 80% operational increase. For 2025, Zoetis is guiding towards 6% to 8% organic operational revenue growth and adjusted net income growth, excluding interest and taxes, of 8% to 10%. The company remains confident in its ability to sustain above-market growth, driven by innovation, market expansion, and strategic investments in its portfolios, despite anticipated foreign exchange headwinds and competitive dynamics.

Zoetis Corporate Events

Dividends

Zoetis Announces Q2 2025 Dividend Payment

Positive

Feb 6, 2025

On February 6, 2025, Zoetis Inc. announced a dividend of $0.500 per share for the second quarter of 2025, payable on June 3, 2025, to shareholders of record as of April 21, 2025. This financial decision reflects the company’s ongoing commitment to shareholder returns and may influence Zoetis’s market positioning as a stable investment in the animal health industry.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.