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Zoetis' (ZTS) Q2 Earnings and Revenues Surpass Estimates

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Zoetis Inc. (ZTS - Free Report) posted second-quarter 2021 adjusted earnings of $1.19 per share (excluding one-time items), which were up from the year-ago quarter’s earnings of 89 cents and ahead of the Zacks Consensus Estimate of $1.08.

Total revenues grew 26% year over year to $1.94 billion, which beat the Zacks Consensus Estimate of $1.83 billion.

Shares of Zoetis have rallied 23.7% in the year so far against the industry's decline of 11.1%.

Zacks Investment Research
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Quarterly Highlights

Zoetis derives 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 — the United States and International.

Revenues from the United States segment increased 22% year over year to $1 billion in the second quarter. Sales of companion animal products in this region grew 34%, primarily owing to higher sales of the SimparicaTrio – the triple-combination parasiticide for dogs. Apoquel and Cytopoint brands in the dermatology portfolio also led to this increase. However, sales of livestock products decreased 8% in the quarter.

Sales of cattle products also decreased year over year as a result of increased generic competition. Sales of swine products remained flat year over year. Also, sales of poultry products declined in the quarter due to the expanded use of lower-cost alternatives for premium products.

Revenues in the International segment increased 31% year over year on a reported basis (up 22% operationally) to $924 million. Livestock sales increased 16% on a reported basis and 10% operationally, year over year. Sales of swine products surged as a result of the continued expansion of production in key accounts in China. Sales of companion animal products grew 51% on a reported and 41% on an operational basis.

The growth resulted from increased sales of Zoetis’ parasiticides portfolio, including the Simparica and Revolution/Stronghold franchises, as well as the key dermatology portfolio consisting of both Apoquel and Cytopoint brands. Growth in the company’s fish portfolio was driven primarily by increased sales of the Alpha Flux sea lice treatment product and the acquisition of Fish Vet Group. Poultry sales grew modestly year over year.

2021 Guidance

Zoetis raised the financial guidance it provided earlier this year.

The company now expects adjusted earnings of $4.47-$4.55 per share compared with the earlier projection of $4.42-$4.51.

Revenues are now projected between $7.625-$7.700 billion compared with the earlier expectation of $7.500-$7.625 billion.

Our Take

Zoetis exceeded second-quarter earnings and sales estimates, driven by the strong uptake of companion animal portfolio products. The company also raised its financial guidance for 2021. It expects to continue witnessing revenue growth, driven by continued strength in 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-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 CanFite Biopharma Ltd (CANF - Free Report) , Ironwood Pharmaceuticals, Inc. (IRWD - Free Report) and Relmada Therapeutics, Inc. (RLMD - Free Report) , all carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CanFite Biopharma’s loss per share estimates have narrowed 26.8% for 2021 and 48% for 2022 over the past 60 days. The stock has soared 16.3% year to date.

Ironwood’s earnings estimates have been revised 3.8% upward for 2021 and 1.7% upward for 2022 over the past 60 days.The stock has rallied 13.6% year to date.

Relmada Therapeutics’ loss per share estimates have narrowed 0.3% for 2021 and 0.8% for 2022 over the past 60 days.