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Zoetis' (ZTS) Q4 Earnings and Revenues Surpass Estimates

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Zoetis Inc. (ZTS - Free Report) posted fourth-quarter 2021 adjusted earnings of $1 per share (excluding one-time items), which beat the Zacks Consensus Estimate of 96 cents. In the year-ago quarter, the company reported earnings of 91 cents.

Total revenues grew 9% year over year to $2.00 billion, which beat the Zacks Consensus Estimate of $1.93 billion.

Shares of Zoetis were up in the pre-market trading session on Tuesday. The stock has rallied 17.8% in the trailing 12 months against the industry’s 33.8% decline.

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Quarterly Highlights

Zoetis derives the majority of 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 U.S. segment increased 9% year over year to $1.04 billion for the fourth quarter. Sales of companion animal products in this region grew 20% 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. Yet, sales of livestock products decreased 13% year over year for the quarter due to a decrease in cattle product sales as a result of generic competition and continued weakness in beef and dairy consumer markets.

Sales of swine products declined year over year due to pricing pressure on anti-infectives and vaccines. Also, sales of poultry products declined for the quarter due to the expanded use of lower-cost alternatives of premium products, in addition to generic competition.

Revenues in the International segment increased 8% year over year on a reported and operational basis to $902 million. Sales of companion animal products grew 22% on a reported and 23% on an operational basis. On a year-over-year basis, livestock product sales declined 1% on a reported basis and 2% operationally. While sales of poultry products increased owing to market expansion in key geographies including the Middle East and China, sales of swine products declined due to increased supply of pork in China, which in turn resulted in declining pork prices.

The growth 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 the recently launched monoclonal antibody products Librela and Solensia brands. Growth of the company’s fish portfolio was driven primarily by increased sales of the Alpha Flux sea lice treatment product and the Alpha Ject LiVac SRS vaccine.

Full-Year 2021 Results

Zoetis posted 2021 adjusted earnings of $4.70 per share (excluding one-time items), which increased from the year-ago figure of $3.85 and beat the Zacks Consensus Estimate of $4.66. Earnings were above the previously announced guided range of $4.62-$4.67.

Total revenues grew 16% year over year to $7.80 billion, which beat the Zacks Consensus Estimate of $7.74 billion. Similar to earnings, revenues were above the company’s guided range of $7.70-$7.75 billion.

2022 Guidance

Zoetis issued its guidance for 2022.

The company expects adjusted earnings of $5.09-$5.19 per share.

Revenues are projected between $8.325 billion and $8.475 billion.

Our Take

Zoetis exceeded fourth-quarter earnings and sales estimates, driven by the strong uptake of companion animal portfolio products. The company also raised 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.

Zacks Rank & Stocks to Consider

Zoetis currently carries a Zacks Rank #4 (Sell).Some better-ranked stocks in the drug/biotech sector include Adaptimmune Therapeutics (ADAP - Free Report) , Theravance Biopharma (TBPH - Free Report) and Vertex Pharmaceuticals (VRTX - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Adaptimmune Therapeutics’ loss per share estimates for 2022 have narrowed from 99 cents to 91 cents in the past 30 days.

Earnings of Adaptimmune Therapeutics beat estimates in three of the last four quarters and missed the mark on one occasion, with the average surprise being 0.9%.

Theravance Biopharma’s earnings per share estimates for 2022 have increased from 47 cents to 48 cents in the past 30 days.

Earnings of Theravance Biopharma beat estimates in three of the last four quarters and missed the mark on one occasion, with the average surprise being 7.3%.

Vertex Pharmaceuticals’ earnings per share estimates for 2022 have increased from $13.39 to $14.33 in the past 30 days. The same for 2023 has risen from $14.10 to $15.31 in the past 30 days. VRTX has risen 8.1% in the past year.

Earnings of Vertex Pharmaceuticals beat estimates in each of the last four quarters, delivering a surprise of 10%, on average.

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