Zoetis Inc.

Zoetis delivered a mixed set of results for the previous quarter with revenues well below analyst expectations but managed an earnings beat. Given the underlying strength of the pet care industry, the company is restating its full-year estimate for operational growth. Their international sector, which grew revenue by 10% operationally in the first quarter, took the lead. This was largely counterbalanced by a 1% decline in the US. While revenues from companion animal products were flat operationally, their livestock portfolio led to the results with a 12% operational gain in revenue. The livestock performance was evaluated based on a double-digit operational increase for cattle, poultry, sheep, and fish. The demand for products from pet owners is anticipated to increase in Q2, moving more inventory and enabling distributors’ purchase patterns to better match the year-round demand. Zoetis’ team anticipates flat operational growth in its cattle portfolio and double-digit operational growth for its cutting-edge companion animal portfolio. Additionally, they are extending their worldwide reach by gaining approval in new markets for novel animal vaccines, including Lawsotek for pigs and Protivity for beef and dairy calves. We give Zoetis Inc. a ‘Hold’ rating with a revised target price.