Yahoo Finance Zoetis (ZTS) Q1 Earnings and Revenues Surpass Estimates
Zoetis, Inc. ZTS delivered first-quarter 2023 adjusted earnings (excluding one-time items) of $1.38 per share, which surpassed the Zacks Consensus Estimate of $1.34. In the year-ago quarter, the company delivered adjusted earnings of $1.31 per share.
Total revenues grew 10% year over year to $2.19 billion in the reported quarter, which also beat the Zacks Consensus Estimate of $2.14 billion. In the year-ago quarter, the company reported total revenues of $2 billion.
Shares of Zoetis are rising during market hours on the back of better-than-expected first-quarter results. The stock has plunged 19.7% in the year-to-date period compared with the industry’s 8.6% decline.
Image Source: Zacks Investment Research
Quarterly Highlights
Zoetis derives the 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 — the United States and International.
Revenues from the U.S. segment increased 16% year over year to $1.16 billion in the first quarter, beating the Zacks Consensus Estimate of $1.1 billion. The reported figure beat our estimate of $1.09 billion in total U.S. revenues.
Sales of companion animal products in the U.S. region jumped 25% from the prior-year quarter’s level, primarily driven by Zoetis’ monoclonal antibody products for osteoarthritis (OA) pain, Librela for dogs and Solensiafor cats, as well as its flea, tick and heartworm combination product for dogs, Simparica Trio. The uptick was also fueled by the company’s key dermatology portfolio, including Apoqueland Cytopoint.
However, sales of livestock products declined 7% during the reported quarter, mainly due to lower sales of cattle products, attributable to a comparatively more difficult period compared with the year-ago quarter.
Revenues in the International segment improved 3% year over year and 8% on an operational basis to $1.007 but missed the Zacks Consensus Estimate of $1.026 billion, as well as our estimate of $1.044 billion.
Sales of companion animal products rose 10% on a reported basis and 14% on an operational basis, driven by growth in several key products. These included OA pain products, Librela for dogs and Solensia for cats, dermatology products like Apoquel and Cytopoint, as well as Zoetis’ parasiticide products, such as Simparica and the Simparica Trio.
On a year-over-year basis, livestock product sales decreased 4% on a reported basis but grew 2% operationally. Growth in both the cattle and poultry portfolios was driven largely by price increases across the broader international segment. Sales of sheep products were adversely impacted by unexpected weather conditions and supply constraints in Australia.
Swine product sales also suffered primarily due to unfavorable market conditions in China and rising generic competition.
2024 Guidance Lowered
Zoetis now expects adjusted earnings in the range of $5.71-$5.81 per share in 2024 compared with the previous guidance of $5.74-$5.84 per share.
Revenues are projected between $9.05 billion and $9.2 billion, suggesting operational growth of 8.5-10.5%. Total revenues were previously projected between $9.075 billion and 9.225 billion.
Our Take
Zoetis reports better-than-expected first-quarter results as earnings and revenues both beat estimates. Sales in the reported quarter were driven by the strong uptake of companion animal portfolio products. ZTS expects to continue witnessing revenue growth, driven by the persistent strength of the pet care portfolio, key dermatology products, ongoing expansion in markets outside the United States and the acceleration of its diagnostics portfolio penetration.
Zoetis Inc. Price and EPS Surprise
Zoetis Inc. price-eps-surprise | Zoetis Inc. Quote
Key Development
In April 2024, Zoetis entered into a definitive agreement to divest its medicated feed additive product portfolio, certain water-soluble products and related assets for $350 million to Phibro Animal Health. The decision to divest falls under the company’s capital allocation strategy to focus its investments on solutions for animal health, productivity and sustainability. ZTS looks to focus its livestock investments on other solutions, including vaccine, biologic and genetic programs.
Subject to the fulfillment of certain customary closing conditions, the transaction is expected to be completed in the second half of 2024.
Zacks Rank and Stocks to Consider
Zoetis currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the drug/biotech industry are Ligand Pharmaceuticals LGND, Blueprint Medicines BPMC and Annovis Bio ANVS. While LGND sports a Zacks Rank #1 (Strong Buy), BPMC and ANVS carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 30 days, the Zacks Consensus Estimate for Ligand’s 2024 earnings per share has remained constant at $4.56. During the same time frame, the estimate for Ligand’s 2025 earnings per share has increased from $5.20 to $5.27. Year to date, shares of LGND have neither booked profits, nor a loss.
Ligand’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 84.81%.
In the past 30 days, the Zacks Consensus Estimate for Blueprint’s 2024 loss per share has narrowed from $5.42 to $5.41. During the same period, the estimate for Blueprint’s 2025 loss per share has narrowed from $2.95 to $2.89. Year to date, shares of BPMC have risen 2.8%.
Blueprint’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 13.26%.
In the past 30 days, the Zacks Consensus Estimate for Annovis’ 2024 loss per share has narrowed from $3.37 to $2.93. The estimate for Annovis’ 2025 loss per share is currently pegged at $2.83. Year to date, shares of ANVS have plunged 67.3%.
Annovis beat estimates in two of the trailing four quarters and missed the mark on the other two occasions, delivering an average negative surprise of 15.70%.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Ligand Pharmaceuticals Incorporated (LGND) : Free Stock Analysis Report
Zoetis Inc. (ZTS) : Free Stock Analysis Report
Blueprint Medicines Corporation (BPMC) : Free Stock Analysis Report
Annovis Bio, Inc. (ANVS) : Free Stock Analysis Report
