Zoetis Surges 45.3% YTD on Strong Portfolio & New Approvals

Shares of Zoetis, Inc. ZTS have surged 45.3% year to date compared with the industry’s growth of 11.4%.

Zoetis is a leader in the animal health business with a wide portfolio. The company’s performance has been stellar in the year so far, backed by growth in new parasiticide products and vaccines, a solid dermatology portfolio, and the addition of Abaxis’ diagnostics platform.

Key dermatology products like Apoquel and Cytopoint, new products such as Simparica and Stronghold Plus, and increased medicalization rates in key international markets should propel further growth.

Approval of new drugs and products have also boosted growth. Earlier in the year, the European Commission (EC) granted marketing authorization to Simparica Trio (sarolaner/moxidectin/pyrantel) chewable tablets, a once-monthly triple combination antiparasitic medication for dogs with or at risk from mixed external and internal parasitic infestations. The approval should strengthen the company’s market-leading parasiticide portfolio for companion animals. Regulatory reviews are also underway in the United States, Australia, Brazil and Japan, with further submissions expected globally. The FDA earlier approved ProHeart 12 (moxidectin), the industry’s only once-yearly injection to prevent heartworm disease in dogs aged 12 months or older.

The company also continues to bolster its vaccine portfolio for livestock. In October, Zoetis received United States Department of Agriculture (USDA) approval for Poulvac Procerta HVT-ND, its first vector vaccine that will help protect against Marek’s disease and Newcastle disease, highly contagious viral infections affecting poultry. Zoetis expanded its Fostera swine vaccine franchise in the second quarter, with approvals of different formulations in new geographies. These should boost further growth.

Additionally, Zoetis has been making prudent acquisitions over the year. The company recently announced the acquisition of ZNLabs, a full-service veterinary clinical reference laboratory company with a network of labs across the United States. The acquisition will strengthen Zoetis’ portfolio, expand its diagnostics footprint and enhance its value proposition to veterinary customers.

In October, Zoetis acquired Phoenix Central Laboratory for Veterinarians, Inc. (Phoenix Lab), a full-service veterinary reference laboratory company to enter the reference laboratory services market. Per the company, reference laboratories and point-of-care diagnostic testing are highly synergistic, offering veterinarians a single source for a full spectrum of tests, as well as access to the expertise of Board-certified specialists and pathologists to support test results.

In August, it acquired Platinum Performance, a privately-held nutrition-focused animal health company.

These acquisitions will further strengthen its market-leading portfolio.

Meanwhile, the animal health business has been in focus. Elanco Animal Health ELAN recently inked a definitive agreement to acquire Bayer’s BAYRY Animal Health business for $7.6 billion.

Zacks Rank & A Stock to Consider

Zoetis currently has a Zacks Rank #3 (Hold).

A better-ranked stock in the healthcare sector is Jazz Pharmaceuticals Inc. JAZZ, which carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Jazz’s earnings per share estimates have increased to $15.86 from $14.99 for 2019 in the past 60 days.

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