Zoetis' (ZTS) Earnings And Revenues Beat Estimates In Q4

Zoetis Inc. (NYSE:ZTS) posted fourth-quarter 2019 adjusted earnings of 92 cents per share (excluding one-time items), which not only increased 16% year over year but also beat the Zacks Consensus Estimate of 88 cents.

Total revenues rose 7% year over year to $1.67 billion, which beat the Zacks Consensus Estimate of $1.64 billion.

Zoetis’ stock has surged 62% in the past year against the industry’s decline of 0.2%.

Quarterly Highlights

The company reports business results under two geographical operating segments — the United States and International. It has a diverse portfolio of products for livestock and companion animals.

Revenues from the United States segment increased 6% year over year to $861 million. Sales of companion animal products in this region grew 15%, primarily owing to higher sales of Apoquel and Cytopoint brands in the dermatology portfolio. ProHeart 12 and Simparica also led to the increase. However, sales of livestock products declined 3% in the quarter due to continued weakness across beef and dairy cattle sectors, which more than offset double-digit growth in poultry and swine.

Revenues at the International segment increased 9% year over year on a reported basis (up 12% operationally) to $791 million. Livestock sales grew 2% (up 5% operationally) in the quarter. Growth in the cattle portfolio was aided by higher sales in key markets, including Australia, Germany and Mexico. Alpha Flux, a recently launched parasiticide, was the main growth driver in fish, while promotional activities across Russia, India and Brazil drove growth in poultry. However, sales of swine products declined as a result of the ongoing impact of the African swine fever in China and other smaller markets in Southeast Asia.

Sales of companion animal products grew 23% on a reported basis, reflecting a rise in the dermatology portfolio and parasiticides, including Simparica and the Revolution/Stronghold franchise, as well as growth across key markets in Western Europe and China.

2019 Results

The company’s adjusted earnings were $3.64 per share, up 16% year over year.

The revenues came in at $6.26 billion, reflecting an increase of 7% year over year.

2020 Guidance

The company expects adjusted earnings of $3.90-$4.00 per share whose mid point is $3.95 which is below the Zacks Consensus Estimate of $3.97. Revenues are expected to be $6.650-$6.800 billion, whose mid point is $6.7250 billion which is above the Zacks Consensus Estimate of $6.69 billion.

The guidance takes into account the foreign exchange rates in late January.

Other Updates

During the fourth quarter, Zoetis received approval for Rimadyl (carprofen) for dogs in China, one of the fastest-growing companion animal markets in the world. Rimadyl, approved in both chewable and injectable formulations, is indicated for the relief of pain and inflammation associated with osteoarthritis (chewables), and for the control of postoperative pain associated with soft tissue and orthopedic surgeries (injectable).

Zoetis expanded its reference laboratory capabilities in the United States with the acquisitions of Phoenix Lab and ZNLabs in November 2019 and Ethos Diagnostic Science in February 2020.

Our Take

Zoetis’ fourth-quarter earnings exceeded estimates and sales surpassed the same on the back of growth in new parasiticide products (Simparica and Stronghold Plus), vaccines and a solid dermatology portfolio.

Zacks Rank and Stocks to Consider

Zoetis currently has a Zacks Rank #3 (Hold).

A few better-ranked stocks from the healthcare space arePacira Pharmaceuticals Inc. (NASDAQ:PCRX) , KalVista Pharmaceuticals Inc. (NASDAQ:KALV) and FibroGen Inc. (NASDAQ:FGEN) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Pacira’s earnings per share estimates have increased from $1.53 to $1.55 for 2019 and from $2.11 to $2.19 for 2020 in the past 60 days. The company delivered a positive earnings surprise in three of the trailing four quarters by 35.36%, on average while delivered negative earnings surprise in the other quarter.

KalVista’s loss per share estimates have narrowed from $1.83 to $1.63 for 2020 and from $2.78 to $2.74 for 2021 in the past 60 days. The company delivered a positive earnings surprise in three of the trailing four quarters by 30.02%, on average while delivered negative earnings surprise in the other quarter.

FibroGen’s loss per share estimates have narrowed from 48 cents to 42 cents for 2020 in the past 60 days. The company delivered a positive earnings surprise in the trailing four quarters by 358.15%, on average.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>