ZTS - Embedded Expectations Analysis - 2018 10 15
Zoetis Inc. (ZTS:USA) currently trades at historical highs relative to UAFRS-based (Uniform) Earnings, with a 27.8x Uniform P/E, implying bullish expectations for the firm. However, management has concerns about headwinds facing their vaccine business, Polish and Brazilian markets, and opportunities for CytopointSpecifically, management may lack confidence in their ability to sustain strong performance in their new swine vaccines and poultry business. Additionally, they may lack confidence in the sustainability of strong beef prices supporting their vaccine business, and in their ability to maintain current growth rates across both pets and livestock markets in Poland. Moreover, they may be concerned about their weak performance in Brazil, and may be exaggerating their increased penetration and coverage of key regions within the country. Also, they may lack confidence in the outlook for opportunities for Cytopoint, and may be exaggerating their optimism about the treatment. Lastly, they may be exaggerating the strength of their antibiotics portfolio, and may be concerned that Q4 2018 will have four fewer international selling days than Q4 2017
Zoetis is a holding company. Through its subsidiaries, the company is engaged in the discovery, development, manufacture and commercialization of animal health medicines, vaccines, and diagnostic products with a focus on both livestock and companion animals. The company operates in two segments: the United States and International. The company's main product categories are vaccines, anti-infectives, parasiticides, other pharmaceutical products, dermatology products, medicated feed additives, and animal health diagnostics. The company's other non-pharmaceutical product categories include nutritionals and agribusiness, as well as products and services including biodevices, genetic tests and precision livestock farming.
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