Analysis: How is Zoetis’ growth impacting its stock prices?
The significant increase in the animal health company’s share price, strong product performance and revenue hikes have made analysts optimistic.
A recent analysis by market research firm Seeking Alpha noted that, in the 6 months between April and September 2024, Zoetis’ stock price surged by 27%, rising to over $190 (€171) per share from $138 (€124).
This growth showcases the company’s solid “core business and strategic diversification,” which is particularly impressive considering its share value was just $30 (€27) in 2013.
Analysts at Seeking Alpha describe Zoetis as an “attractive long-term investment” due to its track record of market leadership, innovation and growth. GlobalPETS examines the main reasons for the company’s recent increase in the share market.
Product growth trends
Zoetis has seen significant success with its medication products, such as Apoquel Chewable, Librela, and Solensia, driving a 142% increase in its pain treatment portfolio this year and 18% in its dermatology segment.
Librela – a pain medication for dogs with osteoarthritis – with over 80% of customers in the US veterinary clinics sector, is expected to contribute substantially to the company’s growth. Combined sales for pain products Librela and Solensia are projected to reach $1 billion (€902.9M) annually.
Analysts highlight Zoetis’ strong performance in the parasiticides, dermatology, pain management and diagnostics sectors as key drivers of continued growth in 2024.
Revenue projections and past trends
Zoetis projects the animal health market to grow 4-6% annually, aiming to reach $75 billion (€67.7B) by 2033.
In 2023, the company generated $8.5 billion (€7.6B) in revenue, 66% of which came from companion animal products.
In the first half of 2024, its companion animal sales rose 13% in the US and 7% internationally, driving total revenue to $4.5 billion (€4B), a 9% year-on-year increase from $4.1 billion (€3.7B) during the same period last year.
The company anticipates that its strong results from Q1 and Q2 2024, which demonstrate the “underlying strength” of the companion animal segment, will propel full-year revenue to an impressive $9.2 billion (€8.3B).
Investor expectations
Analysts predict annual earnings per share (EPS) growth of around 10% through at least 2026, with anticipated yearly returns of 8-10%.
Zoetis’ strong financials point to a 5-year compound annual growth rate (CAGR) of 22%.
These factors make Zoetis a “great investment on dips,” as analysts suggest.
(Photo credit: Zoetis)
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