Research

ZTS – Market expectations are for record-high Uniform ROA, and management is confident about livestock, their virtual productivity, and Pumpkin

November 10, 2020
  • Zoetis Inc. (ZTS:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 39.3x Uniform P/E, implying bullish expectations for the firm. Also, management is confident about their livestock business, virtual productivity, and Pumpkin’s performance
  • Specifically, management is confident in the sustainability of growth of the livestock business and in their ability to maintain productivity. Additionally, they are confident in their ability to do virtual seminars and handle orders by phone during this pandemic. They are also confident the combination of Elanco and Bayer will not dramatically change the competitive landscape, that traveling less will benefit them in the future, and in livestock producers’ ability to adjust to grocery and retail channels. Management is also confident in the sustainability of performance for Pumpkin, their newly launched pet insurance