Zoetis Inc. ZTS will report first-quarter 2023 results on May 4, before market open.
Zoetis’ earnings surprise history has been decent so far. The bottom-line surpassed estimates in one of the trailing four quarters, missed in two, and met in the other. The company delivered an average earnings surprise of 1.04% in the same time frame.
Shares of ZTS gained 19.9% in the year-to-date period against the industry’s 1.3% decline.
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Let's see how things might have shaped up in the soon-to-be-reported quarter.
Factors to Consider
The veterinary drugmaker derives most of its revenues from a diversified product portfolio of medicines and vaccines used to treat and protect livestock and companion animals. Zoetis’ remaining revenues are derived from its non-pharmaceutical product categories, such as nutritional and agribusiness, and products and services in biodevices, genetic tests and precision animal health.
The company reports business results under two geographical operating segments — the United States and International.
First-quarter revenues in the United States segment are likely to have increased from the previous quarter. The top-line estimate for this segment stands at $1.07 billion.
International revenues in the last reported quarter were flat on a reported basis but increased 12% year over year on an operational basis. This trend is expected to have continued in the to-be-reported quarter. The top-line estimate for this segment stands at $957 million.
Improved sales of Apoquel and Cytopoint brands must have boosted the dermatology portfolio in the first quarter. Zoetis’ CompanionAnimal business has also been performing well. This is primarily due to higher sales of Simparica Trio, a triple combination parasiticide for dogs, and the recent launches of its mAb therapies, Librela and Solensia. Such developments are likely to have driven growth in the to-be-reported quarter.
However, livestock product sales and sales of cattle products are expected to have declined year over year, much like the previous quarter.
Sales of poultry products in the United States segment declined in the last reported quarter. This was mostly due to the expanded use of lower-cost alternatives for premium products. However, the same increased in the International segment owing to market growth and demand generation efforts. The trend is likely to have continued in the to-be-reported quarter. Sales of swine products must have also declined year over year due to increased generic competition.
Our proven model does not conclusively predict an earnings beat for Zoetis this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here.
Earnings ESP: Zoetis’ Earnings ESP is +0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Zoetis currently carries a Zacks Rank #3.
Zoetis Inc. Price and EPS Surprise
Zoetis Inc. price-eps-surprise | Zoetis Inc. Quote
Stocks to Consider
Here are a few stocks worth considering from the overall healthcare space, as these have the right combination of elements to come up with an earnings beat this reporting cycle.
Allogene Therapeutics (ALLO) has an Earnings ESP of +3.43% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Allogene’s shares have plunged 13.7% in the year-to-date period. ALLO’s earnings beat estimates in each of the trailing four quarters, delivering an average earnings surprise of 8.33%. The company will report first quarter earnings on May 3, after market close.
Reata Pharmaceuticals RETA has an Earnings ESP of +1.17% and a Zacks Rank #3.
Reata Pharmaceuticals’ shares have surged 160.2% in the year-to-date period. Reata’s earnings beat estimates in two of the last three quarters and missed the mark on one occasion. The company delivered an average earnings surprise of 3.98%.
Amarin AMRN has an Earnings ESP of +100% and a Zacks Rank #3.
Amarin’s shares have surged 11.6% in the year-to-date period. The company’s earnings beat estimates in two of the last four quarters and missed the mark in the other two, delivering a negative average earnings surprise of 14.29%. AMRN will report first-quarter earnings on May 3, before market open.
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