Research

ZTS – Market expectations are for Uniform ROA expansion, but management has concerns about markets, growth, and Apoquel

  • Zoetis Inc. (ZTS:USA) currently trades at historical highs relative to UAFRS-based (Uniform) Earnings, with a 34.4x Uniform P/E, implying bullish expectations for the firm. However, management has concerns about livestock markets, their portfolio growth, and the potential of the Apoquel launch
  • Specifically, management may be concerned about cattle and swine markets, the launch of Apoquel in China, and their ability to grow due to the future emergence of diseases. Also, they may lack confidence in their ability to sustain growth in Brazilian and Chinese markets, their dermatology portfolio, and Simparica revenue. Furthermore, they may be concerned about young animal product testing, lead generation in the diagnostics market, and the promotion of their dermatology portfolio. In addition, they may be exaggerating the strength of their portfolio, positive market dynamics, and the potential global market for Apoquel.