Zoetis Inc. ZTS delivered second-quarter 2023 adjusted earnings (excluding one-time items) of $1.41 per share, which beat the Zacks Consensus Estimate of $1.32 per share. In the year-ago quarter, the company delivered earnings of $1.20 per share.
Total revenues grew 6% year over year to $2.2 billion, surpassing the Zacks Consensus Estimate of $2.17 billion, in the reported quarter. Revolution Vet Medicine
Shares of Zoetis have gained 23.3% in the year-to-date period against the industry’s 3.5% decline.
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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 7% year over year to $1.165 billion in the second quarter, missing the Zacks Consensus Estimate of $1.174 billion. The reported figure beat our estimate of $1.156 billion in total U.S. revenues.
Sales of companion animal products in the U.S. region rose 7% from the prior-year quarter’s level due to increased sales of the company’s key dermatology portfolio, including Apoqueland Cytopoint. Growth in the sales of Zoetis’ vaccine portfolio and Solensia, a monoclonal antibody product for osteoarthritis pain in cats, also contributed to the increased revenues in the second quarter.
Sales of livestock products surged 5% year over year in the reported quarter, fueled by an increase in cattle product sales like Draxxin and implant product Synovex. Revenues from poultry products also increased, driven by the sales growth of vaccines and medicated feed additives.
However, the growth trend in revenues was partially offset by a decline in swine product revenues due to lower disease prevalence.
Revenues in the International segment improved 6% year over year and 11% on an operational basis to $995 million in the second quarter, beating the Zacks Consensus Estimate of $980 million. The reported figure missed our estimate of $998 million in total International revenues.
Sales of companion animal products grew 13% on a reported basis and 17% on an operational basis, driven by growth in several key products. These include monoclonal antibody products for osteoarthritis pain— Librela for dogs and Solensia for cats, dermatology products – Apoquel and Cytopoint as well as Zoetis’ new parasiticide products – Revolution/Stronghold and the Simparica Trio.
On a year-over-year basis, livestock product sales declined 1% on a reported basis and 4% operationally. Growth in the cattle portfolio was driven by expansion as well as rotating medicated feed additives into core poultry markets like Latin America, the European Union and the Middle East.
In the second quarter, Zoetis’ fish portfolio also witnessed an uptick in sales on the back of increased sales of vaccines across key salmon markets, primarily Norway and Chile. Livestock product sales in this segment increased during the quarter due to pricing in hyperinflationary markets and supply recovery, partially offset by pricing in hyperinflationary markets and supply recovery.
Swine product sales suffered a decline in the International segment as well, owing to supply constraints in Western Europe.
Zoetis updated its previously issued guidance for 2023.
Revenues are now projected in the range of $8.500-$8.650 billion (previously $8.575-$8.725 billion), adjusting the impact of foreign exchange rates, although maintaining expected operational growth of 6-8%.
The company now expects adjusted earnings in the band of $5.37-$5.47 per share (previously $5.34-$5.44 per share) for full-year 2023.
Zoetis’ earnings exceeded both earnings and revenue estimates in the reported quarter.The bottom-line performance can be attributed to the strong uptake of livestock products. ZTS expects to continue witnessing growth due to the persistent strength of the pet care portfolio, key dermatology products and the company’s efforts to penetrate new markets.
During the quarter, the FDA approved Apoquel Chewable tablets in the United States for controlling pruritus related to allergic dermatitis and atopic dermatitis in dogs at least 12 months of age. Apoquel chewable is the first and only chewable treatment for the control of allergic itch and inflammation in dogs in the United States. This has likely contributed to the strong performance of the drug during the reported quarter.
Zoetis Inc. price-consensus-eps-surprise-chart | Zoetis Inc. Quote
Zoetis currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the overall medical sector are J&J JNJ, ADC Therapeutics ADCT and ADMA Biologics, Inc. ADMA, each carrying a Zacks Rank #2 (Buy) at present.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the past 90 days, the Zacks Consensus Estimate for J&J’s 2023 earnings per share has increased from $10.66 to $10.74. During the same period, the estimate for JNJ’s 2024 earnings per share has increased from $11.01 to $11.29. Year-to-date, shares of JNJ have lost 2%.
JNJ beat estimates in each of the trailing four quarters, delivering an average earnings surprise of 5.58%.
In the past 90 days, the Zacks Consensus Estimate for ADC Therapeutics’ 2023 loss per share has narrowed from $2.77 to $2.61. During the same period, the estimate for ADC Therapeutics’ 2024 loss per share narrowed from $2.59 to $2.55. Year to date, shares of ADCT have lost 62.8%.
ADCT beat estimates in three of the trailing four quarters, missing the mark on one occasion, delivering an average earnings surprise of 10.70%.
In the past 90 days, the Zacks Consensus Estimate for ADMA Biologics’ 2023 loss per share has narrowed from 14 cents to 8 cents. The consensus estimate for 2024 earnings is currently pegged at 7 cents per share. Year-to-date, shares of ADMA have gained 6.7%.
ADMA beat estimates in each of the trailing four quarters, delivering an average earnings surprise of 19.13%.
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