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Zoetis Inc Class A ZTS Stock Quote

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Morningstar‘s Stock Analysis ZTS

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Is it the right time to buy or sell?

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Zoetis Dogged by Short-Term Turbulence, but Its Wide Moat Remains the Cat's Meow

Debbie S. Wang Senior Equity Analyst

Analyst Note

| Debbie S. Wang |

Zoetis reported third-quarter results that were characterized by a number of growing pains that we categorize as short-term turbulence, but we’ve moderately trimmed our fair value estimate to $170 per share, down from $186, after adjusting our estimate for 2022-23 to reflect ongoing unfavorable foreign exchange, drag from near-term materials shortages, and the delay in U.S. regulatory approval of Librela. Nonetheless, shares remain undervalued from our perspective. Despite these near-term constraints, we see little to alter our confidence in Zoetis' wide economic moat, including its intangible assets and cost structure. Indeed, Zoetis continues to enjoy gross margin nearly 1,200 basis points higher than that of Elanco, its closest stand-alone animal drug competitor. Considering Zoetis' success in shifting its portfolio toward the more-innovative companion animal products with more pricing power, we expect the firm can maintain this advantage over Elanco.

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Key Statistics ZTS

Company Profile ZTS

Business Description

Zoetis sells anti-infectives, vaccines, parasiticides, diagnostics, and other health products for animals. The firm earns slightly less than half of total revenue from production animals (cattle, pigs, poultry, and so on), and more than half from companion animal (dogs, horses, cats) products make up the other half. Its U.S. business is heavily skewed toward companion animals, while its international business is slightly skewed toward production animals. The firm has the largest market share in the industry and was previously Pfizer's animal health unit.

10 Sylvan Way
Parsippany, NJ, 07054
T +1 973 822-7000
Industry Drug Manufacturers - Specialty & Generic
Most Recent Earnings Sep 30, 2022
Fiscal Year End Dec 31, 2022
Employees 12,100

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