ZTS: Earnings Will Rebound As Volume Pressures Ease In 2026

Zoetis' analyst price target has been reduced from approximately $188 to $171 per share, as analysts cite tempered growth expectations and revised financial assumptions following recent quarterly updates.

Analyst Commentary

Following Zoetis' latest quarterly updates and subsequent guidance revision, analysts have updated their perspectives on the company's outlook. Their commentary reflects a mix of optimism surrounding certain growth drivers and caution stemming from immediate challenges.

• Bullish analysts note that Zoetis continues to receive Overweight ratings. Some suggest that current share prices already reflect slower near-term growth, creating potential upside if execution improves.
• Long-term growth prospects remain intact. Management has expressed confidence in a recovery for 2026, which could drive re-acceleration in key franchises once temporary headwinds ease.
• Potential easing of volume pressures from Librela and other products in 2026 is expected to strengthen future revenue performance.
• Margin expansion opportunities are highlighted as an area where Zoetis maintains a significant advantage compared to some competitors. This could support higher earnings over the next two years.

• Bearish analysts are incrementally cautious, highlighting lowered price targets tied to concerns over tempered top-line growth and reduced estimates for 2025 and 2026.
• There is concern that share pressures in Dermatology and Parasiticides may intensify, potentially limiting upside in these segments.
• Reduced revenue guidance for 2025 and persistent uncertainty around international and U.S. market share trends are viewed as immediate challenges to execution.
• Some analysts have adjusted their ratings to Neutral or Hold. They note incremental risks and express a wait-and-see approach until new diligence surveys are completed.

What's in the News

• Zoetis maintained earnings guidance for 2025 and revised full-year revenue guidance to a range of $9.4 billion to $9.475 billion, with organic operational growth projected at 5.5% to 6.5% (Corporate Guidance).
• The European Commission granted marketing authorization for Portela (relfove), the first monoclonal antibody therapy with a three-month dosing interval for osteoarthritis pain relief in cats. This expands Zoetis' pain portfolio (Product Announcement).
• Health Canada approved Lenivia (izenivetmab injection), a new antibody therapy providing three months of osteoarthritis pain relief in dogs after just one injection. This further strengthens Zoetis’ position in canine OA treatment (Product Announcement).
• The FDA conditionally approved Dectomax-CA1 Injectable as the first parasite control product for prevention and treatment of infestations caused by New World screwworm larvae in cattle. This addresses a significant livestock health concern (Product Announcement).
• The European Medicines Agency's Committee for Veterinary Medicinal Products adopted a positive opinion recommending authorization for Lenivia to reduce osteoarthritis pain in dogs, with EU commercial availability expected in 2026 if approved (Product Announcement).

Valuation Changes

• Fair Value Estimate: Lowered from approximately $188 to $171, reflecting a decrease of more than 8% in overall intrinsic value estimates.
• Discount Rate: Increased slightly from 6.78% to 6.96%, indicating somewhat higher perceived risk in forward projections.
• Revenue Growth: Marginally reduced from 4.86% to 4.76%, signaling a slight tempering in anticipated top-line expansion.
• Net Profit Margin: Narrowed modestly from 29.91% to 29.69%, which points to minor pressure on operating profitability assumptions.
• Future P/E (Price-to-Earnings Ratio): Declined from 29.65x to 26.69x. This suggests the market now expects somewhat lower earnings multiples on future results.