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Zoetis (ZTS)
NYSE:ZTS
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Zoetis
(NYSE:ZTS)79Outperform
Positive Factors
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
Earnings Forecast
The FY25 guidance for adjusted EPS is slightly below Street expectations due to unaccounted FX headwinds and other non-operating items.
Revenue Decline
Products outside the top 20, which still account for about 30% of revenue, experienced a decline in sales.
Zoetis (ZTS) vs. S&P 500 (SPY)
Market Cap
$76.36B
Dividend Yield1.05%
Average Volume (3M)3.42M
Price to Earnings (P/E)31.2
Beta (1Y)0.77
Revenue Growth8.33%
EPS Growth7.70%
CountryUS
Employees14,100
SectorHealthcare
Sector Strength74
IndustryPharmaceuticals
Share Statistics
EPS (TTM)5.46
Shares Outstanding447,791,930
10 Day Avg. Volume3,358,953
30 Day Avg. Volume3,418,177
Financial Highlights & Ratios
PEG Ratio4.05
Price to Book (P/B)N/A
Price to Sales (P/S)8.25
Price to Cash Flow (P/CF)21.10
P/FCF Ratio20.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$207.71Price Target Upside22.25% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering8
Zoetis Business Overview & Revenue Model
Company DescriptionZoetis Inc. is a leading global animal health company dedicated to supporting veterinarians and livestock producers in improving the health and well-being of animals. Operating in the animal pharmaceuticals and diagnostics sectors, Zoetis provides a comprehensive portfolio of medicines, vaccines, diagnostic products, and services for both companion animals and livestock. The company's products are designed to prevent and treat diseases, enhance animal productivity, and ensure food safety.
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 Financial Statement Overview
Summary
Zoetis displays strong financial health with excellent profitability margins and solid cash flow generation. The company benefits from low leverage and consistent revenue growth, indicating a stable, expanding business. However, the significant liabilities warrant careful management.Income Statement
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.90
Very Positive
Balance Sheet
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.75
Positive
Cash Flow
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.85
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| 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
Positive
169.90
Price Trends
166.48
Positive
173.00
Negative
176.42
Negative
Market Momentum
-0.29
Negative
54.97
Neutral
87.27
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ZTS, the sentiment is Positive. The current price of 169.9 is above the 20-day moving average (MA) of 166.92, above the 50-day MA of 166.48, and below the 200-day MA of 176.42, indicating a neutral trend. The MACD of -0.29 indicates Negative momentum. The RSI at 54.97 is Neutral, neither overbought nor oversold. The STOCH value of 87.27 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (49)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $76.36B | 31.20 | 52.12% | 1.05% | 8.33% | 7.70% | |
76 Outperform | $35.92B | 41.40 | 55.65% | ― | 6.46% | 5.82% | |
71 Outperform | $235.30B | 13.83 | 36.96% | 3.35% | 6.85% | 4577.79% | |
69 Neutral | $145.93B | 18.28 | 8.68% | 6.44% | 8.77% | 272.80% | |
69 Neutral | $5.52B | 16.67 | 5.54% | ― | 0.50% | ― | |
60 Neutral | $120.62B | ― | -54.78% | 4.04% | 7.32% | -214.24% | |
49 Neutral | $7.05B | 0.34 | -55.09% | 2.46% | 25.27% | -3.43% |
* Healthcare Sector Average
Performance Comparison
ZTS
Zoetis
169.90
-13.38
-7.30%
BMY
Bristol-Myers Squibb
59.44
10.09
20.45%
IDXX
Idexx Laboratories
441.61
-116.71
-20.90%
MRK
Merck & Company
92.56
-27.01
-22.59%
PFE
Pfizer
25.75
1.21
4.93%
ELAN
Elanco Animal Health
10.80
-5.19
-32.46%
Zoetis Earnings Call Summary
Earnings Call Date: Feb 13, 2025 | % Change Since: -2.29% | Next Earnings Date: May 1, 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.Highlights
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.
Lowlights
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.
Business Operations and StrategyFinancial Disclosures
Zoetis Highlights Growth at J.P. Morgan Conference
Positive
Jan 13, 2025
Zoetis announced its participation in the 43rd Annual J.P. Morgan Healthcare Conference, showcasing its exemplary 2024 performance and strategic growth initiatives. The company reported double-digit revenue growth, driven by market-leading products and an innovative pipeline poised to sustain above-market growth. Zoetis continues to capitalize on industry trends like the human-animal bond and increasing pet medicalization, positioning itself for future success with strategic investments and shareholder value creation.
Dividends
Zoetis Boosts Dividend by 16% for 2025
Positive
Dec 12, 2024
Zoetis announced a 16% increase in its quarterly dividend, raising it to $0.500 per share for the first quarter of 2025, reflecting strong company performance and a commitment to shareholder returns. The increased dividend will be paid on March 4, 2025, to shareholders of record as of January 21, 2025, underscoring the company’s robust financial health and strategic focus on returning excess capital.
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.