Zoetis (ZTS) AI Stock Analysis

• Market Cap: $68.30B
• Dividend Yield: 1.27%
• Average Volume (3M): 3.53M
• Price to Earnings (P/E): 26.5
• Beta (1Y): 0.61
• Revenue Growth: 5.27%
• EPS Growth: 13.72%
• Country: US
• Employees: 13,800
• Sector: Healthcare
• Sector Strength: 51
• Industry: Drug Manufacturers - Specialty & Generic
• EPS (TTM): 1.76
• Shares Outstanding: 443,183,470
• 10 Day Avg. Volume: 3,968,870
• 30 Day Avg. Volume: 3,526,625
• 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: 1.10
• Enterprise Value/Revenue: 7.97
• Enterprise Value/Gross Profit: 11.39
• Enterprise Value/Ebitda: 18.53
• 1Y Price Target: $187.29
• Price Target Upside: 22.96% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 8

• Rating: 76 Outperform
• Price Target: $174.00 ▲(14.23% Upside)

Zoetis' strong financial performance and positive earnings call are the primary drivers of its stock score. The company's strategic execution and raised guidance underscore confidence in sustained growth. Technical indicators suggest a balanced momentum, while the valuation reflects a premium pricing. Despite some operational challenges, Zoetis remains well-positioned for future growth.

Positive Factors

Growth Prospects

There remain a significant amount of un- and under-treated pets across parasiticides, dermatology, and OA pain, representing opportunities for incremental market growth.

Market Confidence

Raised full-year guidance should give incremental confidence that the long-term growth algorithm is not broken.

Product Performance

Zoetis' two largest franchises, parasiticides and dermatology, continued to perform well, supported by end market demand and continued sales growth in alternative channels.

Negative Factors

Competitive Pressure

The potential slowdown in the second half is largely short-term from the potential for aggressive pricing/promotional tactics from new competitive entrants.

Product Launch Challenges

Librela performance was light both domestically and internationally, with concerning dynamics popping up in English-speaking international regions.

Sales Performance

The continued lack of traction in the US Librela launch, combined with slippage in International sales, represents an incremental risk to the growth story.

Zoetis Business Overview & Revenue Model

Company Description

Zoetis Inc. (ZTS) is a global leader in animal health, dedicated to supporting the health and well-being of livestock and companion animals. Founded in 1952, the company develops and manufactures a wide range of veterinary medicines, vaccines, and diagnostic products. Zoetis operates in various sectors including livestock, such as cattle, swine, and poultry, as well as companion animals like dogs and cats. Its core products include parasiticides, anti-infectives, vaccines, and nutritional products, all aimed at enhancing animal health and productivity.

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: Neutral
• Last Price: 152.32
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

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 152.32 is above the 20-day moving average (MA) of 150.20, below the 50-day MA of 154.79, and below the 200-day MA of 162.24, indicating a neutral trend. The MACD of -0.58 indicates Negative momentum. The RSI at 51.58 is Neutral, neither overbought nor oversold. The STOCH value of 64.18 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for ZTS.

Zoetis Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ZTS	76 Outperform	$68.30B	26.52	52.54%	1.27%	5.27%	13.72%
RDY	75 Outperform	$12.01B	17.78	17.48%	0.64%	13.13%	-0.47%
ELAN	72 Outperform	$8.92B	20.58	6.83%	―	-0.18%	―
PAHC	68 Neutral	$1.24B	39.25	11.86%	1.57%	19.12%	141.45%
HCM	64 Neutral	$2.87B	6.13	47.53%	―	-2.48%	―
VTRS	57 Neutral	$12.37B	―	-19.77%	4.52%	-7.47%	-438.39%
Sector *	51 Neutral	$7.71B	-0.22	-44.71%	2.25%	22.42%	-0.92%

Zoetis Corporate Events

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.

Zoetis Elects New Board Member at Annual Meeting

On May 21, 2025, Zoetis Inc. held its Annual Meeting of Shareholders, where Dr. Mark Stetter was elected to the Board of Directors, succeeding Mr. Robert Scully who retired in accordance with the company’s director retirement policy. Dr. Stetter, with extensive experience in veterinary medicine and animal health, is expected to contribute significantly to Zoetis’ mission of advancing animal care. The meeting also saw the election of twelve directors, approval of the executive compensation program, and ratification of KPMG LLP as the independent registered public accounting firm, though a shareholder proposal for special meeting improvements was not approved.

Zoetis Announces Q3 2025 Dividend of $0.50

On May 21, 2025, Zoetis announced a dividend of $0.50 per share for the third quarter of 2025, payable on September 3, 2025, to shareholders recorded by July 18, 2025. This decision reflects the company’s ongoing commitment to returning value to its shareholders and may impact its financial positioning and stakeholder relations.