Zoetis: 3.7% Dip Despite Strong Q1 And Raised 2021 Outlook (Preview)

Company Update (ZTS US) (Buy)

Summary

• Zoetis stock fell 3.7% on Thursday despite stronger-than-expected Q1 results and a raised 2021 outlook, including Net Income growing 12-14%.

• In Q1, Zoetis revenues grew 21%, led by Companion Animals up 34% but with Livestock up 17% in International; Net Income grew 34%.

• Zoetis continued to make progress in the Simparica franchise, Dermatology products, Diagnostics, monoclonal antibodies and China.

• The only negatives were a fall in U.S. Poultry revenues and an expected slowdown in H2, partly due to a tough prior-year comparable.

• With shares at $167.52, we expect an exit price of $233 and a total return of 42% (10.1% annualized) by 2024 year-end. Buy.

Introduction

Zoetis Inc. released Q1 2021 results yesterday (Thursday), and Zoetis shares finished the day down 3.7%.

We have upgraded our rating on Zoetis stock to Buy in March. Since then Zoetis shares have gained 10.0% (including dividends). Prior to this, Zoetis was Buy-rated in our coverage between June 2019 and September 2020, during…