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Zoetis Inc.’s (ZTS - Analyst Report) fourth quarter 2013 earnings (excluding special items) of $0.36 per share beat the Zacks Consensus Estimate by a penny. Fourth quarter 2013 earnings were way above the year-ago figure of 11 cents. Higher revenues and lower costs aided results in the reported quarter.

Revenues at Zoetis climbed to $1.3 billion in the final quarter of 2013 from $1.2 billion recorded a year ago. Foreign currency movements adversely impacted revenues during the quarter by 2%. Revenues were in line with the Zacks Consensus Estimate.

Zoetis boasts of a robust and diversified product portfolio. The product portfolio is divided into five categories – anti-infectives, vaccines, parasiticides, medicated feed additives and other pharmaceuticals for veterinarians and livestock producers.

Zoetis markets its offerings primarily across 8 species: cattle, swine, poultry, sheep and fish (livestock) and dogs, cats and horses (companion animals). In the fourth quarter of 2013, sales of livestock products accounted for 68% of total revenues. The balance came from the companion animal products.

Geographically, the company operates in four segments: the U.S, Europe/Africa/Middle East (EuAfME), Canada/Latin America (CLAR), and Asia/Pacific (APAC). Sales improved in the U.S. (7%), EuAfME (11%), CLAR (1%) and APAC (5%) markets. The growth rates are inclusive of foreign exchange impact.

The company’s full-year earnings were $1.42 per share, ahead of the Zacks Consensus Estimate by a penny. Revenues came in at $4.6 billion marginally ahead of the Zacks Consensus Estimate of $4.5 billion. We note that Zoetis is the former Animal Health business of Pfizer Inc. (PFE - Analyst Report). Zoetis started trading on the New York Stock Exchange from Feb 1, 2013.

2014 Outlook

Apart from announcing earnings results, Zoetis announced guidance for 2014. The company expects revenues in the range of $4.65–$4.75 billion. Adjusted earnings are projected in the range of $1.48–$1.54 per share. The Zacks Consensus Estimate (pre-earnings) hints at earnings of $1.63 per share on revenues of $4.77 billion. The lower-than-expected guidance disappointed investors with the share falling in pre-market trading.

Zoetis currently carries a Zacks Rank #3 (Hold). Examples of better-ranked stocks are Forest Laboratories Inc. and Auxilium Pharmaceuticals, Inc. (AUXL - Analyst Report).  Both stocks hold a Zacks Rank #1 (Strong Buy).

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