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Zoetis' (ZTS) Earnings and Revenues Surpass Estimates in Q3

Zoetis' (ZTS) earnings and revenues beat estimates in the third quarter of 2021. The company raised its financial guidance for 2021.

This story originally appeared on Zacks

Zoetis Inc. ZTS posted third-quarter 2021 adjusted earnings of $1.25 per share (excluding one-time items), which beat the Zacks Consensus Estimate of $1.10. In the year-ago quarter, the company reported earnings of $1.10.

- Zacks

Total revenues grew 11% year over year to $2.0 billion, which beat the Zacks Consensus Estimate of $1.94 billion.

Shares of Zoetis were up in pre-market trading on Thursday. The stock has rallied 27.6% in the year so far against the industry's decline of 13.6%.

Zacks Investment ResearchImage Source: Zacks Investment Research

Quarterly Highlights

Zoetis derives the majority of its revenues from a diversified product portfolio of medicines and vaccines used to treat and protect livestock and companion animals. The company reports business results under two geographical operating segments — the United States and International.

Revenues from the United States segment increased 7% year over year to $1.065 billion in the third quarter. Sales of companion animal products in this region grew 17%, primarily owing to higher sales of the Simparica Trio – the triple-combination parasiticide for dogs. The Apoquel and Cytopoint brands in the dermatology portfolio also led to this increase. However, sales of livestock products decreased 13% year over year in the quarter due to decrease in cattle product sales as a result of generic competition.

Sales of swine products declined year over year due to pricing pressure on anti-infectives and vaccines. Also, sales of poultry products declined in the quarter due to the expanded use of lower-cost alternatives of premium products, besides generic competition.

Revenues in the International segment increased 18% year over year on a reported basis (up 14% operationally) to $904 million. Livestock products sales increased 9% on a reported basis and 7% operationally, year over year. Sales of companion animal products grew 29% on a reported and 24% on an operational basis. Sales of swine and poultry products grew owing to key account growth and market expansion in parts of Asia, Brazil and Russia.

The growth resulted from increased sales of Zoetis’ parasiticides portfolio, including the Simparica and Revolution/Stronghold franchises, as well as the key dermatology portfolio consisting of both Apoquel and Cytopoint brands. Growth in the company’s fish portfolio was driven primarily by increased sales of the Alpha Flux sea lice treatment product and the Alpha Ject LiVac SRS vaccine in Chile.

2021 Guidance

Zoetis raised the financial guidance it provided earlier this year.

The company now expects adjusted earnings of $4.62-$4.67 per share compared with the earlier projection of $4.47-$4.55.

Revenues are now anticipated between $7.700-$7.750 billion compared with the earlier expectation of $7.625-$7.700 billion. The Zacks Consensus Estimate for the same stands at $7.69 billion.

Our Take

Zoetis exceeded third-quarter earnings and sales estimates, driven by the strong uptake of companion animal portfolio products. The company also raised its financial guidance for 2021. It expects to continue witnessing revenue growth, driven by continued strength in the petcare portfolio, key dermatology products, ongoing expansion in markets outside the United States and the acceleration of its diagnostics portfolio penetration.

Zoetis Inc. Price, Consensus and EPS Surprise

Zoetis Inc. Price, Consensus and EPS Surprise

Zoetis Inc. price-consensus-eps-surprise-chart | Zoetis Inc. Quote

Zacks Rank & Stocks to Consider

Zoetis currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the same sector include Enanta Pharmaceuticals, Inc. ENTA, Endo International plc ENDP and Foghorn Therapeutics Inc. FHTX, all carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Enanta Pharmaceuticals’ loss per share estimates have narrowed 10.2% for 2021 and 16.3% for 2022 over the past 60 days. The stock has skyrocketed 110.4% year to date.

Endo International’s earnings estimates have been revised 1.3% upward for 2021 and 0.4% upward for 2022 over the past 60 days.

Foghorn Therapeutics’ loss per share estimates have narrowed 0.8% for 2021 and 0.9% for 2022 over the past 60 days.

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