Zoetis (ZTS) Poised To Grow On Companion Animal Portfolio

We issued an updated report on Zoetis, Inc. (NYSE:ZTS) on Aug 18.

Zoetis boasts a robust and diversified product portfolio. The company’s business is divided into five categories – anti-infectives, vaccines, parasiticides, medicated feed additives and other pharmaceuticals. Zoetis markets its offerings primarily across eight core species – cattle, swine, poultry, sheep and fish (collectively, livestock) and dogs, cats and horses (collectively, companion animals).

Zoetis derives a majority of its revenues from a diversified product portfolio of medicines and vaccines that are used to treat and protect livestock and companion animals. The company continues to strengthen its diverse portfolio of products through lifecycle innovations, strong customer relationships, and access to new markets and technologies. Apoquel and other product launches continue to drive growth in companion animal portfolio.

The company expects to witness stronger growth from its companion animal portfolio in 2017 driven by its dermatology portfolio, Apoquel and Cytopoint, further penetration of Simparica, and ongoing uptake of new vaccines. Latest data shows that 55% of dogs with dermatology problems in the U.S. are treated with Apoquel or Cytopoint, up from 52% in the first quarter.

In addition, new approvals further boost portfolio. Zoetis received approval for Clavamox Chewable in the U.S. in May 2017, Cytopoint in the European Union in April and in Canada in March.

Zoetis stock has moved up 13.5% in the year so far compared with the industry’s loss of 3.5%.

However, disease outbreak among animals is a concern for Zoetis’ livestock products. Such outbreaks may hurt regional or global sales of particular animal-derived food products or result in reduced exports of the same, either due to heightened export restrictions or import prohibitions, in turn, dampening demand for livestock products.

Moreover, Zoetis faces stiff competition from other animal health medicines and vaccines companies like Merck Animal Health, the animal health division of Merck & Co (NYSE:MRK) , Elanco, the animal health division of Eli Lilly and Co. (NYSE:LLY) , Bayer (DE:BAYGN) Animal Health, the animal health division of Bayer AG (OTC:BAYRY) and Boehringer Ingelheim Animal Health (the animal health division of Boehringer Ingelheim).

Zacks Rank

Zoetis currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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