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ZTS – Market expectations are for Uniform ROA to remain at current peaks, but management has concerns about growth, expenses, and market share

March 19, 2019

  • Zoetis Inc. (ZTS:USA) currently trades at historical highs relative to UAFRS-based Earnings, with a 27.8x Uniform P/E, implying somewhat bullish expectations for the firm. However, management appears concerned about their dermatology portfolio growth, R&D and SG&A expenses, and international market share
  • Specifically, management may lack confidence in their ability to sustain revenue growth in Abaxis, their dermatology portfolio, and companion animal product segment. Moreover, they may be downplaying concerns about gross margin, and concerned about R&D investments, SG&A spending, and FX headwinds. In addition, they may be exaggerating their competitive positioning in the market and ability to gain market share internationally

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