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Zoetis' (ZTS) Q1 Earnings and Revenues Surpass Estimates

Zoetis Inc. ZTS reported first-quarter 2022 adjusted earnings of $1.32 per share (excluding one-time items), which beat the Zacks Consensus Estimate of $1.22 per share. In the year-ago quarter, the company had reported earnings of $1.26 per share.

Total revenues grew 6% year over year to $2.00 billion, which also beat the Zacks Consensus Estimate of $1.97 billion.

Shares of Zoetis were up in the pre-market trading session on Thursday. The stock has plunged 27.5% so far this year compared with the industry’s 21.4% decline.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Quarterly Highlights

Zoetis derives the majority of its revenues from a diversified product portfolio of medicines and vaccines used to treat and protect livestock and companion animals. The company reports business results under two geographical operating segments — United States and International.

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Revenues from the U.S. segment increased 9% year over year to $1.02 billion for the first quarter. Sales of companion animal products in this region grew 18% from the prior-year quarter, primarily owing to higher sales of Simparica Trio, the triple-combination parasiticide for dogs. The Apoquel and Cytopoint brands in the dermatology portfolio also led to this increase. However, sales of livestock products decreased 11% year over year for the quarter due to a decrease in cattle product sales as a result of generic competition for Draxxin and unfavorable conditions in beef and dairy consumer markets.

In the reported quarter, sales of swine products grew slightly year over year owing to favorable market conditions for producers. Yet, sales of poultry products declined in the quarter due to the expanded use of lower-cost alternatives as well as generic competition for Zoamix.

Revenues in the International segment increased 3% year over year on a reported and 8% on an operational basis to $948 million. Sales of companion animal products grew 17% on a reported and 23% on an operational basis. Livestock product sales declined 9% year over year on a reported basis and 3% operationally. While sales of poultry products increased owing to demand generation and supply recovery in Australia, Mexico and Brazil, sales of swine products declined due to the increased supply of pork in China, which in turn resulted in declining pork prices.

Growth in the segment resulted from increased sales of Zoetis’ parasiticides portfolio, including the Simparica and Revolution/Stronghold franchises, the key dermatology portfolio consisting of both Apoquel and Cytopoint brands, as well as recently launched monoclonal antibody products, the Librela and Solensia brands for dog and cats, respectively. Growth of the company’s fish portfolio was driven primarily by increased sales of the Alpha Flux sea lice treatment product and the Alpha JectLiVac SRS vaccine.

2022 Guidance

Owing to the negative impact of foreign exchange rates, Zoetis has updated its full-year 2022 guidance.

The company now expects adjusted earnings in the range of $4.99-$5.09 per share compared with the previous expectation of $5.09-$5.19 per share.

Revenues are now projected between $8.225 to $8.375 billion compared with the previous range of $8.325 to $8.475 billion. The Zacks Consensus Estimate for the metric is pegged at $8.42 billion.

Our Take

Zoetis exceeded first-quarter earnings and sales estimates, driven by the strong uptake of companion animal portfolio products. The company, however, lowered its financial guidance for 2022. ZTS expects to continue witnessing revenue growth, driven by persistent strength of the petcare portfolio, key dermatology products, ongoing expansion in markets outside the United States and the acceleration of its diagnostics portfolio penetration.

Zoetis Inc. Price, Consensus and EPS Surprise

Zoetis Inc. Price, Consensus and EPS Surprise
Zoetis Inc. Price, Consensus and EPS Surprise

Zoetis Inc. price-consensus-eps-surprise-chart | Zoetis Inc. Quote

Zacks Rank & Stocks to Consider

Zoetis currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the same sector include Xencor, Inc. XNCR, Corbus Pharmaceuticals Holdings, Inc. CRBP and Soleno Therapeutics, Inc. SLNO. While Xencor sports a Zacks Rank #1 (Strong Buy), Corbus Pharmaceuticals and Soleno Therapeutics carry Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Xencor’s loss per share estimates have narrowed 9.8% for 2022 and 6.7% for 2023 over the past 60 days.

Earnings of Xencor have surpassed estimates in each of the trailing four quarters.

Corbus Pharmaceuticals’ loss per share estimates have narrowed 19.4% for 2022 and 16.2% for 2023 over the past 60 days.

Earnings of Corbus Pharmaceuticals have surpassed estimates in three of the trailing four quarters and missed the same on the other occasion.

Soleno Therapeutics’ loss per share estimates have narrowed 9.1% for 2022 and 25.9% for 2023 over the past 60 days. The SLNO stock has skyrocketed 214.4% year to date.

Earnings of Soleno Therapeutics have surpassed estimates in three of the trailing four quarters and missed the same on the other occasion.


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