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Zoetis (ZTS) to Report Q1 Earnings: What's in the Cards?

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Zoetis Inc. (ZTS - Free Report) is slated to to report first-quarter 2019 results on May 2.

The company has surpassed expectations in the previous four quarters, the average positive earnings surprise being 6.50%.

Zoetis’ share price movement shows that the stock has outperformed the industry in the past year. The stock has rallied 20.8% compared with  the industry’s growth of 11.4%.

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

Factors to Consider

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 continues to strengthen its portfolio through lifecycle innovations, strong customer relationships, and access to new markets and technologies.

The company’s companion animal business has been performing well. Apoquel and other product launches continue to drive growth in the companion animal portfolio. Key dermatology products like Apoquel and Cytopoint, new products such as Simparica and Stronghold Plus, and increased medicalization rates in key international markets such as China and Brazil should propel further growth.

The company’s new product, Revolution Plus (selamectin and sarolaner topical solution), a new combination topical product for cats and kittens should also drive revenues in the first quarter.

Zoetis expects revenues between $6.175 billion and $6.300 billion in 2019.

In July 2018, the company completed the acquisition of Caifornia-based Abaxis to augment presence in the animal health diagnostics market, which is a fast-growing portion of the animal health industry. This is anticipated to boost sales further.

We expect the company to throw more light on other pipeline updates along with the upcoming results.

What Our Model Indicates

Our proven model does not conclusively show that Zoetis is likely to beat on earnings in the to-be-reported quarter. This is because the stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat estimates. But that is not the case here, as you will see below.

Earnings ESP: Zoetis has an Earnings ESP of -2.36%, as the Zacks Consensus Estimate is pegged at 77 cents, while the Most Accurate Estimate is pegged at 79 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zoetis Inc. Price and EPS Surprise

 

Zoetis Inc. Price and EPS Surprise | Zoetis Inc. Quote

Zacks Rank: The company carries a Zacks Rank #2, which increases the predictive power of ESP. However, we need to have a positive Earnings ESP to be confident of an earnings beat.

Note that Sell-rated stocks (Zacks Rank #4 or 5) going into an earnings announcement are best avoided.

Stocks That Warrant a Look

Here are some stocks you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter.

Ultragenyx Pharmaceuticals Inc. (RARE - Free Report) has an Earnings ESP of +6.36% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Glaxo SmithKline plc. (GSK - Free Report) has an Earnings ESP of +3.55% and a Zacks Rank #3. The company is scheduled to release first-quarter 2019 results on May 1.

Novo Nordisk A/S (NVO - Free Report) has an Earnings ESP of +0.80% and a Zacks Rank #3. The company is scheduled to release its first-quarter 2019 results on May 3.

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