A month has gone by since the last earnings report for Zoetis Inc. (ZTS - Free Report) . Shares have added about 5.7% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is ZTS due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Zoetis Beats on Q1 Earnings & Sales, Retains '18 View
Zoetis posted first-quarter 2018 adjusted earnings of $0.75 per share (excluding one-time items), which increased 42% year over year and beat the Zacks Consensus Estimate of $0.70.
Total revenues rose 11% year over year (up 7% operationally excluding the impact of currency) to $1.37 billion in the quarter and beat the Zacks Consensus Estimate of $1.33 billion.
Zoetis reports business results under two geographical operating segments — the United States and International. The company has a diverse portfolio of products for livestock and companion animals.
Revenues from the United States segment increased 5% year over year to $634 million. Sales of companion animal products in this region were up 6%, primarily due to higher sales of dermatology portfolio and new product launches. This was partially offset by lower sales of in-line products. Livestock revenues increased 4% mainly due to increased sales of cattle and poultry products, partially offset by declines in dairy products.
Revenues at the International segment grew 18% year over year (up 11% operationally) on a reported basis to $726 million. Livestock sales were up 14% on a reported basis (up 7% operationally) in the quarter mainly driven by strong growth for cattle and poultry products. Moreover, sales of companion animal products grew 28% on a reported basis and 19% on an operational basis, reflecting higher sales of dermatology portfolio and newly launched products, especially Simparica.
2018 Outlook Maintained
Zoetis reiterated its outlook for 2018. The company continues to expect adjusted earnings in the range of $2.96-$3.10 per share.
Revenues are expected in the range of $5.675-$5.800 billion. The Zacks Consensus Estimate for earnings and revenues is pegged at $3.04 per share and $5.75 billion, respectively.
The company continued to expand the availability of its oral flea and tick medication, Simparica, into new markets, with additional approvals in Thailand and Serbia. Zoetis’ canine dermatology product, Cytopoint, received approval in Mexico and Switzerland.
In the United States, the company enhanced its swine vaccine franchise with the approval of Fostera Gold PCV MH for protection against PCV and mycoplasma hyopneumoniae.
Moreover, Inforce 3, a respiratory disease vaccine, received approval in Korea and Egypt while treatment for mastitis in dairy cows, Spectramast DC, was approved in China.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been two revisions lower for the current quarter.
Zoetis Inc. Price and Consensus
At this time, ZTS has a strong Growth Score of A, though it is lagging a bit on the momentum front with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is primarily suitable for growth investors while also being suitable for those looking for momentum and to a lesser degree value.
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, ZTS has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.