Zoetis has a leading portfolio of medicines, vaccines, diagnostics and technologies in more than 100 countries that markets for eight main species: cattle, swine, poultry, sheep and livestock and dogs, cats and horses. Zoetis Inc shares are listed and traded on the New York Stock Exchange.
Zoetis’ revenue in the last closed quarter, the second quarter of 2024, amounted to USD 2.4 billion, +8% compared to the second quarter of 2023 and +11% on a comparable basis. Of note is the 12% boost in revenue in the US and the 10% growth in operating income internationally. Growth in the quarter was primarily driven by pet products, including Simparica and Simparica Trio, key dermatology products, Apoquel and Cytopoint, as well as OA pain products, Librela for dogs and Solensia for cats. On the other hand, sales of products for production animals grew by 8% in operational terms. The growth of beef and poultry products was largely due to rising prices in hyperinflationary markets. Sales of seafood products grew due to increased demand for vaccines in Norway.
Net income in the quarter ended in June was 624 million USD, or 1.37USD/share, a decrease of 7% and 6%, respectively, compared to the same period in 2023. Regarding Zoetis’ balance sheet, solvency is at very comfortable levels, with DFN/EBITDA ratio at 1.26v at the end of 2023 and 1.16v under estimate for the end of 2024.
The pet and livestock portfolios experienced global operating growth of 12% and 9% respectively in the second quarter of 2024. Already in the third quarter of 2024, it obtained approval in Canada for Alpha Ject Micro ® 7 ISA, the latest version of its combination vaccine for Atlantic salmon. Simparica and Simparica Trio received approval in Canada for a claim related to the treatment and control of Asian longhorned tick (Haemaphysalis longicornis) infestations in dogs.
The company also received approval in Japan for Draxxin ® KP (tulathromycin ketoprofen), an injectable for the treatment of bacterial pneumonias in cattle. Fostera ® Gold PCV MH, a single-dose vaccine for pigs against porcine circovirus type 2 (PCV2) and Mycoplasma hyopneumoniae infections, has obtained approval in Mexico for a claim related to the safety of breeding herds.
The company is further strengthening its diagnostic offering with the planned launch of a new premium hematology analyzer. Innovative AI-powered classification technology will deliver significant advances in complete blood count (CBC) analysis.
Zoetis Historical Quote
FUNDAMENTAL ASSESSMENT OF ZOETIS
Halfway through the year, Zoetis has revised upwards its forecast for the entire 2024. In summary, it now expects to record revenues between $9.1 billion and $9.25 billion (operating growth of 9% to 11%); Net Income reported between 2,450 and 2,490 million dollars and adjusted between 2,640 and 2,690 million dollars (operational growth from 13.5% to ​​15.5%). 2024 is being a year of growth for Zoetis that also maintains a robust balance sheet. As for the dividend, it is traditionally distributed in four payments and in increasing amounts year by year. In 2024, there remains to be received a quarterly dividend that will be paid in December for $0.43/share, which places the profitability on dividend-Yield at 0.89%. Remarkable profitability on partner contributions, ROE, greater than 40%.
By multiples it is not cheap, in line with other competitors in a period of growth. The market pays 35x Zoetis’ estimated earnings for 2024 compared to an average ratio for its comparables of 26.58x; cash flow ratio at 32.6x vs. 24.0x sector average and EV/EBITDA around 23.3x, compared to 20x average among peers.
|
2024e |
PER |
PSV |
PCF |
EV/EBITDA |
Divd.-Yield |
|
Zoetis |
35,05 |
9,49 |
32,64 |
23,32 |
0,89% |
|
IDEXX Lab. |
45,25 |
10,03 |
38,00 |
30,70 |
0,00% |
|
Merck |
13,88 |
4,34 |
12,33 |
11,23 |
2,75% |
|
Bayer |
5,12 |
0,55 |
3,71 |
6,15 |
0,42% |
|
Elanco Animal H. |
15,60 |
1,60 |
7,59 |
13,42 |
0,00% |
|
Align Tech. |
23,60 |
4,10 |
21,99 |
16,41 |
0,00% |
|
Amgen |
16,65 |
5,25 |
13,45 |
11,44 |
2,82% |
|
Eli Lilly |
57,46 |
19,10 |
62,59 |
47,80 |
0,59% |
|
Medias |
26,58 |
6,81 |
24,04 |
20,06 |
0,93% |
Ratios calculated with the price at the close of 10/14/2024 and own estimates (EI) based on market consensus.
Based on fundamental valuation criteria, our recommendation for Zoetis securities is positive for a long-term investment horizon. The potential for growth is important.
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