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On Tuesday, Leerink Partners adjusted its price target for Zoetis Inc . (NYSE:ZTS), a global leader in animal health, moving it to $180 from the previous $190, while keeping an Outperform rating on the stock. Currently trading at $149.87, InvestingPro analysis suggests the stock is undervalued, with analyst targets ranging from $165 to $238. The firm’s analysis acknowledged a mixed quarter for Zoetis, noting strong consumer spending on pet healthcare products, particularly in parasiticides and dermatology. These areas showed robust performance in the recent quarter, contributing to the company’s solid 8.33% revenue growth over the last twelve months.
Despite overall positive trends, Zoetis experienced a decline in U.S. sales of Librela, one of its more costly offerings, with a $6 million sequential drop in the quarter. Leerink attributed this downturn partly to broader macroeconomic pressures, which have also led to increased demand for the company’s more affordable products. As Librela represents a key driver of organic growth for Zoetis, with less than $50 million in quarterly sales, its underperformance has prompted a more cautious outlook from Leerink, especially regarding the company’s long-acting OA pain monoclonal antibody (mAb), expected to command a premium price.
The firm also commented on Zoetis’ exposure to tariffs, which currently has a manageable impact on core EPS growth at about 1%. However, Leerink noted that this could vary due to the uncertain economic environment. Despite the issues faced with Librela, Leerink remains optimistic about Zoetis’ prospects for 2025 and 2026. The company’s core revenue drivers, particularly in dermatology and parasiticides, are expected to continue their strong performance.
Leerink has revised its operational growth model for Zoetis to the lower end of the company’s 6-8% guidance range. This adjustment is based on reduced estimates for Librela sales, balanced by the ongoing strength in other product lines. The new 12-month price target of $180 is set at approximately 26 times Leerink’s estimated calendar year 2026 earnings per share for Zoetis, compared to the previous multiple of around 28 times. InvestingPro reveals that Zoetis has maintained dividend payments for 13 consecutive years with a 15.74% dividend growth rate, demonstrating strong financial health with an overall score of 3.1 (GREAT). For detailed analysis including 12 additional ProTips and comprehensive metrics, investors can access the full Pro Research Report on the platform.
In other recent news, Zoetis Inc. reported its financial results for Q1 2025, surpassing analysts’ expectations with an earnings per share (EPS) of $1.48, compared to the forecast of $1.41. The company also exceeded revenue projections, posting $2.22 billion against the anticipated $2.20 billion. Despite these strong earnings and revenue figures, Zoetis’ stock experienced a decline, which may be attributed to broader market influences or investor concerns. The company highlighted significant growth in key product lines such as Simparica and OA pain monoclonal antibodies. Zoetis projects a full-year revenue guidance ranging from $9.425 billion to $9.575 billion, with an expected organic operational growth of 6-8%. Additionally, the company anticipates an adjusted net income between $2.775 billion and $2.825 billion. On the analyst front, discussions during the earnings call included potential impacts of regulatory changes and competition in key markets. The firm continues to focus on innovation and market expansion, particularly in its companion animal portfolio.
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