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Is a Beat in Store for Zoetis (ZTS) This Earnings Season?

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We expect Zoetis Inc. (ZTS - Free Report) to surpass expectations when it reports third-quarter 2021 results on Nov 4, before market opens.

The company’s earnings surprise history has been excellent so far, having surpassed expectations in each of the trailing four quarters, delivering an earnings surprise of 15.19%, on average. In the last-reported quarter, Zoetis delivered an earnings surprise of 10.19%.

Shares of Zoetis have rallied 30.6% in the year so far against the industry’s decrease of 15.1%.

Zacks Investment ResearchImage Source: Zacks Investment Research

Let's see how things are shaping up for this announcement.

Factors to Consider

Zoetis derives a 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.

Revenues in the last-reported quarter increased year over year to $1,004 million in the United States – a trend that most likely continued in the third quarter as well. The Zacks Consensus Estimate for revenues in the United States is pegged at $1,005 million. International revenues in the last-reported quarter increased year over year to $924 million. This trend is also expected to have continued in the to-be-reported quarter. The Zacks Consensus Estimate for international revenues stands at $872 million.

Strong sales of the dermatology portfolio strengthened the United States segment in the last-reported quarter, a trend that most likely continued in the third quarter as well. The company’s companion animal business has also been performing well, primarily owing to higher sales of the SimparicaTrio – a triple combination parasiticide for dogs.

In the last-reported quarter, sales of livestock products declined year over year — a trend that most likely continued in the third quarter as well. Sales of poultry products also declined in the last-reported quarter due to the expanded use of lower-cost alternatives for premium products — a trend expected to have continued in the to-be reported quarter. Sales of cattle products also decreased year over year due to increased generic competition — a trend that most likely continued in the third quarter as well.

In the last-reported quarter, sales of swine products remained flat year over year — a trend expected to have continued in the to-be reported quarter.

For the International segment, sales of companion animal products increased in the last-reported quarter. The trend is expected to have continued in the third quarter as well. Growth in the company’s fish portfolio was primarily driven by increased sales of the Alpha Flux sea lice treatment product — a trend that most likely continued in the third quarter.

Why a Likely Positive Surprise?

Our proven model predicts an earnings beat for Zoetis this season. 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. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Earnings ESP: Zoetis has an Earnings ESP of +5.46% as the Zacks Consensus Estimate stands at $1.10 per share while the Most Accurate Estimate is pegged at $1.16 per share.

Zacks Rank: Zoetis has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Zoetis Inc. Price and EPS Surprise

Zoetis Inc. Price and EPS Surprise

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

Other Stocks to Consider

Here are a few stocks you may want to consider as our model shows that these too have the right combination of elements to beat on earnings this reporting cycle:

Gemini Therapeutics, Inc. (GMTX - Free Report) has an Earnings ESP of +17.61% and carries a Zacks Rank #2, currently.

Black Diamond Therapeutics, Inc. (BDTX - Free Report) has an Earnings ESP of +1.87% and carries a Zacks Rank #3 at present.

Endo International plc (ENDP - Free Report) has an Earnings ESP of +14.60% and carries a Zacks Rank #3 at present. The company is scheduled to report earnings on Nov 4.