Zoetis, Inc. ZTS delivered fourth-quarter 2023 adjusted earnings (excluding one-time items) of $1.24 per share, which missed the Zacks Consensus Estimate of $1.33. In the year-ago quarter, the company delivered earnings of $1.15 per share.
Total revenues grew 8% year over year to $2.21 billion, surpassing the Zacks Consensus Estimate of $2.19 billion in the reported quarter.
Shares of Zoetis have gained 20.6% in the past year against the industry’s 2.8% decline.
Zacks Investment Research
Image 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 U.S. segment increased 9% year over year to $1.21 billion in the fourth quarter, beating the Zacks Consensus Estimate of $1.19 billion. The reported figure beat our estimate of $1.16 billion in total U.S. revenues.
Sales of companion animal products in the U.S. region rose 10% from the prior-year quarter’s level, primarily driven by Zoetis’ monoclonal antibody products for osteoarthritis (OA) pain, Librela for dogs and Solensiafor cats, as well as its flea, tick and heartworm combination product for dogs, Simparica Trio. The uptick was also fueled by the company’s key dermatology portfolio, including Apoqueland Cytopoint.
Sales of livestock products rose 4% year over year in the reported quarter, due to an increase in cattle and swine product sales as a result of increased supply of vaccines. Revenues from poultry products also increased, driven by the sales growth of medicated feed additivesand the expanded use of Zoamix.
Revenues in the International segment improved 9% year over year and 8% on an operational basis to $982 million in the fourth quarter, beating the Zacks Consensus Estimate of $971 million. However, the reported figure missed our estimate of $1 billion in total International revenues.
Sales of companion animal products grew 13% on a reported basis and 10% on an operational basis, driven by growth in several key products. These included OA pain products, Librela for dogs and Solensia for cats, dermatology products like Apoquel and Cytopoint, as well as Zoetis’ parasiticide products, such as Simparica and the Simparica Trio.
On a year-over-year basis, livestock product sales increased 5% on a reported basis and 7% operationally. Growth in both the cattle and poultry portfolios was driven largely by price increases across the broader international segment.
In the fourth quarter, Zoetis’ fish portfolio also witnessed an uptick in sales on the back of a new vaccine launch in Norway.
However, sales in the sheep product portfolio in the international segment declined due to unfavorable market conditions in Australia and New Zealand. Swine product sales also suffered in China primarily due to unfavorable market conditions and a comparatively more difficult period compared with the year-ago quarter.
Full-Year 2023 Results
Zoetis posted 2023 adjusted earnings of $5.32 per share (excluding one-time items), which increased from the year-ago figure of $4.88 but missed the Zacks Consensus Estimate of $5.41.
Total revenues grew 6% year over year to $8.54 billion, which beat the Zacks Consensus Estimate of $8.52 billion.
2024 Guidance
Zoetis expects adjusted earnings in the range of $5.74-$5.84 per share in 2024.
Revenues are projected between $9.075 billion and $9.225 billion, indicating an expected operational growth of 7-9%.
Our Take
Zoetis reports mixed fourth-quarter results as earnings missed estimates while revenues beat the same. Sales in the reported quarter were driven by the strong uptake of companion animal portfolio products. ZTS expects to continue witnessing revenue growth, driven by the persistent strength of the pet care 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 and Stocks to Consider
Zoetis currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the drug/biotech industry are Puma Biotechnology, Inc. PBYI, ADMA Biologics ADMA and Immunocore IMCR. While PBYI & ADMA currently sport a Zacks Rank #1 (Strong Buy), IMCR carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 30 days, the Zacks Consensus Estimate for Puma Biotech’s 2023 earnings per share (EPS) has remained constant at 73 cents. During the same time frame, the consensus estimate for Puma Biotech’s 2024 EPS has remained constant at 69 cents. Over the past year, shares of PBYI have gained 46.5%.
PBYI beat estimates in three of the last four quarters while missing on one occasion, delivering a four-quarter average earnings surprise of 76.55%.
In the past 30 days, the Zacks Consensus Estimate for ADMA Biologics’ 2023 loss per share has remained constant at 2 cents. The consensus estimate for ADMA Biologics’ 2024 EPS is pegged at 22 cents. Over the past year, shares of ADMA have jumped 49.2%.
ADMA beat estimates in three of the trailing four quarters and matched in one, delivering an average earnings surprise of 63.57%.
In the past 30 days, the Zacks Consensus Estimate for Immunocore’s 2023 loss per share has remained constant at 95 cents. During the same period, the consensus estimate for Immunocore’s 2024 loss per share has remained constant at $1.42. Over the past year, shares of IMCR have risen 13.4%.
IMCR beat estimates in two of the trailing four quarters and missed on the other two occasions. In the last reported quarter, IMCR reported an earnings surprise of 112.5%.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
