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On Monday, Stifel analysts maintained their Buy rating and $180.00 price target on Zoetis Inc . (NYSE:ZTS), a leading animal health company. According to InvestingPro data, the stock currently trades near Fair Value, with analyst consensus remaining bullish at 1.75 (Strong Buy). The affirmation follows the release of Stifel’s 2025 Zoetis Outlook report, which provided a detailed analysis of the company’s potential revenue streams and product performance, particularly focusing on the U.S. market for Librela, Zoetis’s drug for osteoarthritis in dogs.
The report indicated that, based on findings from physician diligence, Stifel has adjusted its revenue estimates for Librela in the U.S. for the years 2025 and 2026 downwards. The revision was informed by a variety of data, including insights into Librela’s safety profile and a new flow chart projecting the drug’s revenue for 2025. InvestingPro reveals that 4 analysts have recently revised their earnings estimates downward for the upcoming period, though the company maintains a strong financial health score of 3.15 (GREAT).
A key factor influencing these adjusted expectations is a communication from Zoetis to veterinarians, known as a "Dear Vet" letter, which appears to have had a significant impact. According to the report, this letter has affected a subset of veterinarians’ willingness to administer Librela, which may alter the drug’s utilization curve. While the peak sales targets for Librela remain unchanged, the timeline to reach those targets may be extended.
Despite the tempered outlook for Librela, Stifel’s report suggests that Zoetis’s overall growth will not be significantly hindered. The analysis projects a 6.9% organic revenue growth worldwide for Zoetis in 2025, which aligns closely with the broader market sentiment and other analyst expectations. This growth is anticipated to be driven by the strong performance of other key products in the company’s portfolio, collectively referred to as the "Starting Five."
The Stifel report concludes that while the U.S. Librela revenue estimate has been set at $257 million, below the consensus of approximately $300 million, the robust product lineup at Zoetis is expected to support the company’s growth trajectory. With revenue growth of 9.33% in the last twelve months and a healthy gross profit margin of 70.09%, the company’s fundamentals remain strong. The firm’s sustained positive outlook on Zoetis stock reflects confidence in the company’s ability to navigate market challenges and capitalize on its diverse range of animal health products. For deeper insights into Zoetis’s financial health and growth prospects, including 14 additional ProTips and comprehensive valuation metrics, visit InvestingPro.
In other recent news, Zoetis Inc. has been making significant strides in the animal health sector. Stifel has maintained its Buy rating on the company’s shares, despite reducing the price target to $180 from $210, citing resilience of key franchises and projected revenue growth. Zoetis reported a robust Q3 growth with a 14% operational revenue increase to $2.4 billion and a 15% surge in adjusted net income to $716 million, largely attributed to demand for its osteoarthritis pain treatments, Librela and Solensia.
In addition to these financial highlights, Zoetis has announced significant leadership changes. Jamie Brannan has been appointed as Chief Commercial Officer, and Keith Sarbaugh will replace Wafaa Mamilli as Executive Vice President and Chief Digital & Technology Officer in early 2025. Jared Shriver will step into the role of President of U.S. Operations.
Despite facing a challenging year, Zoetis continues to show resilience. Stifel analysts have projected an acceleration of innovation for the company in late 2025 and 2026. However, they also raised safety concerns regarding Zoetis’s pain management drug for dogs, Librela, which led to lowered estimates for the product. These are recent developments that investors should consider in their analysis of the company’s performance and future prospects.
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