Business Description
Zoetis Inc. discovers, develops, manufactures, and commercializes animal health medicines, vaccines, and diagnostic products in the United States and internationally. It commercializes products primarily across species, including livestock, such as cattle, swine, poultry, fish, and sheep; and companion animals comprising dogs, cats, and horses. The company also offers vaccines, which are biological preparations to prevent diseases of the respiratory, gastrointestinal, and reproductive tracts or induce a specific immune response; anti-infectives that prevent, kill, or slow the growth of bacteria, fungi, or protozoa; and parasiticides that prevent or eliminate external and internal parasites, which include fleas, ticks, and worms. It also provides other pharmaceutical products that comprise pain and sedation, antiemetic, reproductive, and oncology products; dermatology products for itch associated with allergic conditions and atopic dermatitis; and medicated feed additives, which offer medicines to livestock. In addition, the company provides portable blood and urine analysis testing, including point-of-care diagnostic products, instruments and reagents, rapid immunoassay tests, reference laboratory kits and services, and blood glucose monitors; and other non-pharmaceutical products, including nutritionals and agribusiness services, as well as products and services in areas, such as biodevices, genetics tests, and precision animal health. It markets its products to veterinarians, livestock producers, and retail outlets, as well as third-party veterinary distributors through its sales representatives, and technical and veterinary operations specialists. The company was founded in 1952 and is headquartered in Parsippany, New Jersey.
Business History
Generated: Jun 7, 2026 2:02pmPrice Overview
Last updated: Jun 7, 2026 2:00pm (19d ago)Price History (1 Year)
Revenue & Net Income Trend
| Period | Revenue | Net Income | Net Margin | YoY/QoQ |
|---|
Key Metrics
EPS (Diluted): 6.03
Total Equity: $3.33B
Shares: 443,835,000
Total Debt: $9.29B
Cash: $2.31B
EBITDA: $4.07B
Total Debt: $9.29B
Cash: $2.31B
Revenue: $9.47B
Revenue: $9.47B
Revenue: $9.47B
Total Equity: $3.33B
Tax Rate: 20.4%
Equity: $3.33B
Total Debt: $9.29B
Cash: $2.31B
Current Liabilities: $2.24B
Long-Term Debt: $9.24B
Total Debt: $9.29B
Total Equity: $3.33B
Shares: 443,835,000
Shares: 443,835,000
CapEx: -$621.00M
Shares: 443,835,000
Stock Price: $79.44
Net Income: $2.67B
Industry Benchmarks
Advanced Analysis Forensic deep-dive · three lenses
Zoetis shows the profile of a durable specialty pharma leader: revenue grew from $7.78B (2021) to $9.47B (2025), a ~5% CAGR, while gross margin expanded from 68.3% to 70.5% and operating margin from 36.0% to 38.0%. That is genuine operating leverage, not financial engineering — net income rose from $2.04B to $2.67B and FCF reached $2.28B in 2025 with OCF/NI at 1.05x and accruals at -1% of assets. Beneish M of -2.45 and Altman Z of 4.62 corroborate clean, real earnings.
Capital discipline is a standout. Diluted shares fell from 476.7M to 443.8M (-1.8% CAGR), SBC is only 0.9% of revenue, and buybacks are ~25x SBC — management is concentrating per-share value rather than diluting it. The balance sheet carries net debt of ~$7B against $2.3B cash, so it's not a fortress, but $2.28B of annual FCF easily services it; this is leverage in service of returns, not survival risk.
The one qualitative caveat is moat detail: animal health has structural durability (companion-animal parasiticides, dermatology, livestock vaccines), but the data alone doesn't reveal product concentration (e.g., reliance on Simparica Trio) or competitive pressure. Insider open-market buys by D'Amelio, Bisaro, and McCallister ($886K total, zero sells) are a small but unambiguously positive signal from the people closest to the business.
Verify before trusting this (6)
- Product concentration — % of revenue from Simparica Trio and top 5 products
- Pricing vs volume mix behind 2025 revenue slowdown to $9.47B
- Debt maturity schedule and weighted-average interest rate on the ~$9B gross debt
- Competitive threats in companion-animal parasiticides (Elanco Credelio Quattro, Merck) and any patent cliff exposure
- R&D productivity — pipeline visibility beyond current franchise products
- Livestock segment trajectory vs companion animal mix shift
The e2e composite FV of $96.68 and signal-adjusted FV of $91.71 imply 15-22% upside from $79.44. The methods triangulate reasonably: DCF $95.42, anchored P/E $120.55, and an EPV floor of $75.31 — the EPV being below price tells me the no-growth scenario is roughly already in the stock, which is comforting. The anchored P/E looks like the runaway input (premised on Zoetis's historical premium multiple holding), so I'd weight DCF and EPV more heavily, landing me near $88-92 deserved.
Against $79.44, that's roughly a 10-15% gap — not deep value, but not 'priced for perfection' either. The 2025 revenue deceleration from 8.4% to 2.3% appears to have done real damage to the multiple, and the market is now pricing closer to bear-case growth than bull. For a clean-earnings, buyback-supported franchise with expanding margins, paying a small discount to deserved value is a fair setup — but the margin of safety isn't fat enough to call it a screaming buy.
Verify before trusting this (5)
- 2026 guidance and whether the 2.3% revenue growth is reaffirmed as transitory or structural
- Segment detail on companion-animal vs livestock — where the deceleration is concentrated
- Any one-time items (FX, divestitures, destocking) in the 2025 print that artificially depressed growth
- Pricing actions and volume trends in core franchises (Simparica, Apoquel post-LOE dynamics)
- Updated buyback pace and capital-return commitments
The tape itself is roughly neutral (VIX 17, S&P just off highs) and ZTS is a low-beta 0.74 defensive healthcare name, so the macro backdrop is not the dominant force here. The real pressure is name-specific: the May 7 earnings miss and full-year guide cut sent the stock to a seven-year low on a 21.5% one-day crash, and that wound is still fresh. For a 'steady-compounder' archetype, a guidance reset is the cardinal sin - it directly attacks the only story this stock has, and narrative intensity has collapsed to minimal as a result. There is no cult, no AI halo, no thematic bid to defend it. Analyst tone is where the divergence sits: consensus targets still sit near $121 versus a $77 price, but the board has drifted to Hold (15 Hold vs 14 Buy) and there have been zero target revisions this month - a stale, backward-looking book that has not yet recut to the new reality. That overhang of pending downward revisions is itself a headwind. Net: macro-neutral, narrative-damaged, analyst tone quietly fading - a steady headwind rather than a violent one.
Verify before trusting this (4)
- Q2 print and whether U.S. companion animal sales stabilize - the single biggest narrative pivot
- First wave of analyst target cuts (or surprise reiterations) following the guide reset
- Any signs of intensity rebuilding in the steady-compounder narrative (insider buys, capital return raise)
- Whether VIX breaks above 20 and tape turns risk-off, which would reactivate even low-beta selling
Deep Analysis
Pre-flight intelligence scans the company first, then routes to the right analytical methods.
Income Statement (Annual)
Last updated: Jun 3, 2026 7:08pm (23d ago)| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue | $7.8B | $8.1B | $8.5B | $9.3B | $9.5B |
| Cost of Revenue | $2.5B | $2.6B | $2.7B | $2.9B | $2.8B |
| Gross Profit | $5.3B | $5.5B | $5.8B | $6.4B | $6.7B |
| Operating Expenses | $2.5B | $2.5B | $2.8B | $3.0B | $3.1B |
| Operating Income | $2.8B | $2.9B | $3.1B | $3.4B | $3.6B |
| Net Income | $2.0B | $2.1B | $2.3B | $2.5B | $2.7B |
| EBITDA | $3.2B | $3.4B | $3.7B | $3.9B | $4.1B |
| EPS | $4.29 | $4.51 | $5.08 | $5.47 | $6.03 |
| EPS (Diluted) | — | — | — | — | — |
Balance Sheet (Annual)
Last updated: Jun 3, 2026 7:06pm (23d ago)| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Cash & Equivalents | $3.5B | $3.6B | $2.0B | $2.0B | $2.3B |
| Total Current Assets | $6.9B | $7.5B | $6.3B | $6.0B | $6.8B |
| Total Assets | $13.9B | $14.9B | $14.3B | $14.2B | $15.5B |
| Current Liabilities | $1.8B | $3.2B | $1.9B | $3.4B | $2.2B |
| Long-Term Debt | $6.6B | $6.6B | $6.6B | $5.2B | $9.2B |
| Total Liabilities | $9.4B | $10.5B | $9.3B | $9.5B | $12.1B |
| Total Equity | $4.5B | $4.4B | $5.0B | $4.8B | $3.3B |
| Retained Earnings | $7.2B | $8.7B | $10.3B | $12.0B | $13.7B |
Cash Flow (Annual)
Last updated: Jun 3, 2026 7:08pm (23d ago)| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Operating Cash Flow | $2.2B | $1.9B | $2.4B | $3.0B | $2.9B |
| Capital Expenditure | -$477.0M | -$586.0M | -$732.0M | -$655.0M | -$621.0M |
| Free Cash Flow | $1.7B | $1.3B | $1.6B | $2.3B | $2.3B |
| Acquisitions (net) | -$14.0M | -$312.0M | -$59.0M | $285.0M | -$24.0M |
| Debt Repayment | — | — | — | — | — |
| Dividends Paid | — | — | — | — | — |
| Stock Buybacks | -$743.0M | -$1.6B | -$1.1B | -$1.9B | -$3.2B |
| Net Change in Cash | -$119.0M | $96.0M | -$1.5B | -$54.0M | $325.0M |
Analyst Estimates (Annual)
Last updated: Jun 7, 2026 2:00pm (19d ago)| Metric | 2027 | 2028 | 2029 | 2030 |
|---|---|---|---|---|
| Revenue |
$10.2B $10.0B – $10.6B
|
$10.7B $10.7B – $10.7B
|
$11.2B $11.1B – $11.6B
|
$11.7B $11.6B – $12.1B
|
| EBITDA |
$4.6B $4.5B – $4.8B
|
$4.8B $4.8B – $4.8B
|
$5.1B $5.0B – $5.2B
|
$5.3B $5.2B – $5.5B
|
| Net Income |
$3.3B $3.2B – $3.4B
|
$3.6B $3.2B – $4.0B
|
$3.9B $3.8B – $4.0B
|
$4.2B $4.1B – $4.3B
|
| EPS | — | — | — | — |
Growth Trends (YoY %)
Last updated: Jun 3, 2026 7:08pm (23d ago)| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue Growth | +3.9% | +5.7% | +8.3% | +2.3% |
| Gross Profit Growth | +3.1% | +6.5% | +9.6% | +4.3% |
| Operating Income Growth | +4.5% | +4.8% | +10.5% | +6.0% |
| Net Income Growth | +3.8% | +10.9% | +6.1% | +7.5% |
| EBITDA Growth | +5.9% | +9.7% | +5.1% | +5.1% |
Insider Trading (Recent)
Last updated: Jun 7, 2026 2:05pm (19d ago)All SEC Form 4 codes
- P Purchase
- Open-market or private purchase of shares.
- S Sale
- Open-market or private sale of shares.
- A Award / grant
- Grant or award of securities (RSUs, options, etc.) under Rule 16b-3.
- D Return to issuer
- Securities disposed back to the company under Rule 16b-3.
- F In-kind (tax)
- Shares withheld or delivered to pay the option-exercise price or tax — not an open-market sale.
- I Discretionary
- Discretionary transaction under an employee plan — Rule 16b-3(f).
- M Option exercise
- Exercise or conversion of a derivative (option/RSU) into shares — exempt.
- C Conversion
- Conversion of a derivative security into the underlying shares.
- E Short expiration
- Expiration of a short derivative position.
- H Long expiration
- Expiration or cancellation of a long derivative position with value received.
- O OTM exercise
- Exercise of an out-of-the-money derivative.
- X ITM exercise
- Exercise of an in-the-money or at-the-money derivative.
- G Gift
- Bona fide gift of securities.
- L Small acquisition
- Small acquisition under Rule 16a-6.
- W Inheritance
- Acquisition or disposition by will or the laws of descent.
- Z Voting trust
- Deposit into or withdrawal from a voting trust.
- J Other
- Other acquisition or disposition (explained in a Form 4 footnote).
- K Equity swap
- Transaction in an equity swap or similar instrument.
- U Tender / buyout
- Disposition via tender of shares in a change-of-control transaction.
Compensation-plan codes (A, D, F, M) are routine and rarely directional. Open-market P (buy) and S (sale) carry the most signal.
| Date | Insider | Type | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-06-18 | Stetter Mark | A-Award | 317.62 | $0.00 | $0 |
| 2026-06-15 | Nayak Abhay U | 0.00 | $0.00 | $0 | |
| 2026-06-15 | Nayak Abhay U | 253.09 | $0.00 | $0 | |
| 2026-06-15 | Nayak Abhay U | 4,423.00 | $129.13 | $571,142 | |
| 2026-06-15 | Nayak Abhay U | 3,590.00 | $156.64 | $562,338 | |
| 2026-06-15 | Nayak Abhay U | 2,830.00 | $196.14 | $555,076 | |
| 2026-06-15 | Nayak Abhay U | 3,314.00 | $162.07 | $537,100 | |
| 2026-06-15 | Nayak Abhay U | 8,106.00 | $0.00 | $0 | |
| 2026-06-15 | Nayak Abhay U | 1,508.77 | $0.00 | $0 | |
| 2026-06-10 | MCCALLISTER MICHAEL B | G-Gift | 1,209.00 | $0.00 | $0 |
| 2026-05-21 | Stetter Mark | M-Exempt | 1,572.00 | $0.00 | $0 |
| 2026-05-21 | Stetter Mark | M-Exempt | 1,572.06 | $0.00 | $0 |
| 2026-05-20 | PARENT LOUISE M | M-Exempt | 10,186.00 | $0.00 | $0 |
| 2026-05-20 | PARENT LOUISE M | M-Exempt | 1,944.00 | $0.00 | $0 |
| 2026-05-20 | PARENT LOUISE M | M-Exempt | 1,944.36 | $0.00 | $0 |
| 2026-05-20 | PARENT LOUISE M | M-Exempt | 10,186.67 | $0.00 | $0 |
| 2026-05-13 | DAMELIO FRANK A | P-Purchase | 6,650.00 | $75.39 | $501,344 |
| 2026-05-13 | Bisaro Paul | P-Purchase | 2,000.00 | $75.88 | $151,750 |
| 2026-05-11 | MCCALLISTER MICHAEL B | P-Purchase | 3,000.00 | $77.76 | $233,273 |
| 2026-04-30 | Esch Kevin | M-Exempt | 259.00 | $0.00 | $0 |
Dividend History (Last 20)
Last updated: Jun 3, 2026 7:03pm (23d ago)| Date | Dividend | Declaration | Record | Payment |
|---|---|---|---|---|
| 2026-07-20 | $0.53 | 2026-05-20 | 2026-07-20 | 2026-09-01 |
| 2026-04-20 | $0.53 | 2026-02-05 | 2026-04-20 | 2026-06-02 |
| 2026-01-20 | $0.53 | 2025-12-11 | 2026-01-20 | 2026-03-03 |
| 2025-10-31 | $0.50 | 2025-10-09 | 2025-10-31 | 2025-12-02 |
| 2025-07-18 | $0.50 | 2025-05-21 | 2025-07-18 | 2025-09-03 |
| 2025-04-21 | $0.50 | 2025-02-06 | 2025-04-21 | 2025-06-03 |
| 2025-01-21 | $0.50 | 2024-12-12 | 2025-01-21 | 2025-03-04 |
| 2024-10-31 | $0.43 | 2024-10-10 | 2024-10-31 | 2024-12-03 |
| 2024-07-18 | $0.43 | 2024-05-22 | 2024-07-18 | 2024-09-04 |
| 2024-04-18 | $0.43 | 2024-02-06 | 2024-04-19 | 2024-06-04 |
| 2024-01-18 | $0.43 | 2023-12-07 | 2024-01-19 | 2024-03-01 |
| 2023-10-31 | $0.38 | 2023-10-12 | 2023-11-01 | 2023-12-01 |
| 2023-07-20 | $0.38 | 2023-05-11 | 2023-07-21 | 2023-09-01 |
| 2023-04-20 | $0.38 | 2023-02-08 | 2023-04-21 | 2023-06-01 |
| 2023-01-19 | $0.38 | 2022-12-08 | 2023-01-20 | 2023-03-01 |
| 2022-10-31 | $0.33 | 2022-10-13 | 2022-11-01 | 2022-12-01 |
| 2022-07-20 | $0.33 | 2022-05-19 | 2022-07-21 | 2022-09-01 |
| 2022-04-20 | $0.33 | 2022-02-08 | 2022-04-21 | 2022-06-01 |
| 2022-01-19 | $0.33 | 2021-12-07 | 2022-01-20 | 2022-03-01 |
| 2021-10-28 | $0.25 | 2021-10-14 | 2021-10-29 | 2021-12-01 |
Narrative Economics
market-narrative step).
Delvantic AI Findings
Looking at the raw numbers first: revenue growth has clearly flattened — the most recent quarter (2026-03-31) shows $2.26B versus $2.22B a year prior, a 1.8% YoY print, while the prior four quarters averaged ~$2.37B. That's not just deceleration, it's a sequential step-down of $130M from the 2025-09 peak. Net income margin compressed from 30% in Q3 2025 to 26.6% in the latest quarter, with absolute NI dropping from $721M to $601M — a 17% peak-to-trough decline in two quarters. Annual 2025 still looks healthy ($9.47B rev, $2.67B NI, +7.2% earnings growth), but the quarterly trajectory says the back half of 2025 was the high-water mark and something broke in Q1 2026. FCF of $2.28B on a $33.3B market cap is a ~6.8% FCF yield, which is genuinely cheap for a 70% gross margin franchise — IF the deceleration is cyclical, not structural.
The P/E of 12.7x ttm is jarring for a business that historically traded at 30-40x. Either the market is right that the moat is cracking (Librela adverse event concerns, Elanco's parasiticide competition, compounding pharmacies eroding pricing) or this is a generational entry point in a niche monopoly. The insider purchases on May 11-13, 2026 — actual P-Purchase, not option exercises — are the most interesting tell in the file. Insiders rarely buy mature-earner pharma names with their own cash unless they think the multiple compression has overshot. Three separate purchase transactions in one week, post the weak Q1 print, is a real signal, not noise. That said, the share counts (3,000-6,650) are small in dollar terms (~$240k-530k each) — directionally meaningful, not a Buffett-sized vote.
Where I disagree with the prior models: the Valuation Synthesis's $91.71 signal-adjusted fair value feels anchored to historical multiples that may not return. If animal health is genuinely entering a "show me" period (Market Forces is right here), a 22-25x P/E is the new ceiling, not the floor — that puts fair value closer to $75-85 on 2026 EPS of ~$5.80-6.20, not $96. The Pre-Flight narrative of "niche-monopoly-compounder" is half-right; the monopoly claim needs scrutiny given Elanco's parasiticide launches and Librela's PR overhang. The contrarian case the models underweight: animal health TAM growth is decelerating post-pandemic pet adoption surge — the 2020-2022 cohort of new pet owners is aging into reduced vet spend, and pet adoption rates have normalized below pre-COVID. That's not a quarter-or-two reset, that's a 2-3 year demand normalization. The 18.7% FCF CAGR is flattering because it's measured off a 2021 capex-heavy base; don't extrapolate it.
The balance sheet data is conspicuously incomplete — total debt and total equity both shown as "—" which is a real gap given ZTS carries roughly $6-7B in long-term debt historically. EV/EBITDA of 10x assumes that debt load is intact, and the 16.7x P/B with implied equity of ~$2B suggests heavy buybacks have eaten book value, making ROE of 62% partly a leverage artifact. That changes the quality story: this is a leveraged compounder, not a pristine balance sheet. Net-net, I land between the synthesis verdict and the bear case. The insider buying plus 6.8% FCF yield plus 12.7x P/E argues the price already reflects a lot of the deceleration risk; the flattening top line and margin compression argue against paying up for a re-rating that may not come until 2027. A starter position around $79 makes sense; I'd want to see the next two quarters confirm Q1 was a trough before sizing up. The synthesis's +15% upside feels directionally right but the path is asymmetric — limited downside to $65-70 (10x trough EPS), upside capped at $90-95 unless growth re-accelerates above 5%.
GPT Critique
Zoetis Inc. presents a compelling yet complex picture when viewed through the latest data. The company has shown a steady growth trajectory over the past five years, with revenues increasing from $7.78B in 2021 to $9.47B in 2025, and net income following suit. However, recent quarterly figures indicate a deceleration, with Q1 2026 revenue at $2.26B, a minor increase from $2.22B in Q1 2025, and a noticeable drop from the $2.46B peak in Q2 2025. The net income margin has also contracted from 30% in Q3 2025 to 26.6% in Q1 2026. This suggests that while Zoetis has historically been a strong performer, it may be entering a phase of slower growth. The company's P/E ratio of 12.7x, significantly lower than its historical range, further underscores market concerns about future growth prospects and competitive pressures.
Regarding Claude Opus's analysis, I find myself agreeing with several key points. Opus correctly identifies the flattening revenue and margin compression as warning signs that Zoetis's growth may be stalling. The sequential revenue drop and declining net margins are indeed indicative of more than a seasonal blip. I also concur with their assessment that the current P/E ratio reflects a recalibration of market expectations, potentially due to competitive threats and internal challenges such as the Librela issues. The insider buying activity is a positive signal, suggesting that insiders view the current price as undervalued, which aligns with Opus's interpretation that this could be a generational entry point if the deceleration is cyclical.
However, I diverge from Opus on the valuation synthesis and the broader narrative. Opus argues that the fair value is around $82-88, assuming a modest recovery. I believe this range might be optimistic unless Zoetis can demonstrate a turnaround in its quarterly growth trajectory. The deceleration in the animal health market post-pandemic, as Opus mentions, suggests a more prolonged normalization period. Additionally, the lack of detailed balance sheet information, particularly regarding debt levels, introduces uncertainty. Given that Zoetis has historically carried substantial debt, the impact on valuation metrics like EV/EBITDA and ROE should be scrutinized, potentially warranting a more conservative valuation approach.
A careful skeptic might argue that both my view and Opus's underestimate the structural challenges in the animal health market. They could contend that the competitive landscape is fundamentally shifting, with generic erosion and private equity consolidation posing longer-term threats that neither analysis fully accounts for. Furthermore, the macroeconomic environment, including potential interest rate hikes, could exacerbate these issues by increasing the cost of capital and squeezing margins further.