The Bull Case for Zoetis Stock as Michael Burry Doubles Down
Zoetis sign at their Canadian By JHVEPhoto Animal healthcare company Zoetis (ZTS) faces headwinds from companion animal product sales due to a competitive landscape, primarily from its key dermatology franchise and Simparica Trio. Moreover, Zoetis’ Convenia and Cerenia brands face heightened competition from generic brands. The company is also dealing with lower sales from Librela,…
Animal healthcare company Zoetis (ZTS) faces headwinds from companion animal product sales due to a competitive landscape, primarily from its key dermatology franchise and Simparica Trio. Moreover, Zoetis’ Convenia and Cerenia brands face heightened competition from generic brands.
The company is also dealing with lower sales from Librela, its monoclonal antibody (mAb) product for osteoarthritis (OA) pain in pets, due to some safety concerns regarding its usage. Solensia, another one of its OA medicines, has also come under fire. However, Librela has received the vote of confidence from the Veterinary Medicines Directorate in the U.K.
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Notably, Zoetis launched Lenivia, an injectable OA therapy for dogs, and Portela, its feline counterpart, in Canada and the EU, opening up a market that can offset the headwinds from its products under scrutiny. Moreover, the company’s pipeline has 12 candidates across areas of significant unmet medical need including chronic kidney disease, oncology, cardiology, anxiety and obesity.
Against this backdrop and with its second-quarter earnings approaching, “Big Short” famed Michael Burry increased his position in Zoetis, possibly believing in the long-term prospects for animal healthcare providers rather than the gains that the AI names are providing.
We take a closer look at Zoetis at this juncture…
About Zoetis Stock
Zoetis is a global animal health company that develops, manufactures, and markets medicines, vaccines, diagnostics, and other products for livestock and companion animals. Its operations span research, production, and commercial support across major markets, serving veterinarians, farmers, and pet owners worldwide.
The company focuses on preventing, detecting, and treating animal diseases while expanding its portfolio through innovation and global distribution. Zoetis is headquartered in Parsippany, New Jersey and has a market capitalization of $32.40 billion.
Investors are not showing much confidence in Zoetis’ growth outlook at the moment. The biggest pressure point has been safety concerns and slower sales for Librela and Solensia.
Over the past 52 weeks, Zoetis’ stock has dropped 47.6%, while it is down 38.6% year-to-date (YTD). Just for comparison, the S&P 500 Healthcare Sector SPDR (XLV) has gained 23.5% and 4.64% over the same periods, respectively. Zoetis’ stock reached a 52-week low of $71.47 on June 30, but is up 8.16% from that level.
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The sell-off has made Zoetis’ stock relatively cheaper. On a forward-adjusted basis, its price-to-earnings (non-GAAP) ratio of 11.26 times is lower than the industry average of 19.18 times.
Zoetis Posted Mixed Q1, With Revenue Growth But An Adjusted Outlook
Zoetis faced a challenging environment in the first quarter of 2026, as pet owners showed increased price sensitivity, with fewer vet visits and lower demand for its innovative products. The company’s revenue increased by a modest 3% year-over-year (YOY) to $2.26 billion. However, its organic operational growth remained flat. Its non-GAAP EPS grew 9% from the prior-year period to $1.53.
The slowdown came in the U.S. segment, as revenues dropped 8% YOY to $1.09 billion (offset in total revenue by 17% growth in the international segment to $1.15 billion). However, the bright spot in the U.S. has been its livestock business. Sales of livestock products increased 7% in the quarter, driven by broad-based growth across cattle, poultry and swine.
Zoetis had to adjust its outlook to reflect the current operating environment. Its revenue guidance was adjusted to $9.68 billion to $9.96 billion, indicating 2% to 5% growth. Earlier, the company expected its fiscal year alignment to provide approximately 200 basis points to 250 basis points of tailwind, but the current market situation is now projected to more than offset that. Its EPS guidance range was updated to $6.85 to $7.00.
Wall Street analysts are optimistic about Zoetis’ future earnings. For the current fiscal year, EPS is projected to surge 7.2% annually to $6.87, followed by a 7% growth to $7.35 in the next fiscal year. Analysts also expect the company’s EPS to grow 4.6% YOY to $1.84 for the second quarter of fiscal 2026 (to be reported on Aug. 6, before the market opens).
What Do Analysts Think About Zoetis’ Stock?
In July, UBS analysts maintained a “Neutral” rating on Zoetis’ stock and lowered the price target from $99 to $85. Morgan Stanley analyst Erin Wright maintained a solid “Buy” rating, but lowered the price target from $115 to $99. HSBC analysts also kept their “Buy” rating on the stock, but cut the price target from $140 to $95. These show that analysts have moderated their expectations about Zoetis.
Wall Street is soundly bullish on Zoetis’ stock, with analysts awarding it a consensus “Moderate Buy” rating overall. Of the 18 analysts rating the stock, eight analysts have given it a “Strong Buy” rating, one analyst gave a “Moderate Buy” rating, while nine analysts are taking the middle-of-the-road approach with a “Hold” rating. The consensus price target of $107.19 represents a 38.6% upside from current levels, while the Street-high price target of $160 indicates a 106.9% upside.
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On the date of publication, Anushka Dutta did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
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