ZTS – Market expectations are for continued Uniform ROA expansion, but management has concerns about their vaccine business, international markets, and Cytopoint

• Zoetis Inc. (ZTS:USA)currently trades at historical highs relative to UAFRS-based (Uniform) Earnings, with a 27.8x Uniform P/E, implying bullish expectations for the firm. However, management has concerns about headwinds facing their vaccine business, Polish and Brazilian markets, and opportunities for Cytopoint
• Specifically, management may lack confidence in their ability to sustain strong performance in their new swine vaccines and poultry business. Additionally, they may lack confidence in the sustainability of strong beef prices supporting their vaccine business, and in their ability to maintain current growth rates across both pets and livestock markets in Poland. Moreover, they may be concerned about their weak performance in Brazil, and may be exaggerating their increased penetration and coverage of key regions within the country. Also, they may lack confidence in the outlook for opportunities for Cytopoint, and may be exaggerating their optimism about the treatment. Lastly, they may be exaggerating the strength of their antibiotics portfolio, and may be concerned that Q4 2018 will have four fewer international selling days than Q4 2017