Zoetis Inc. (ZTS) kicked off the week with a strong performance, exceeding analysts’ expectations for both earnings and revenue in the third quarter of 2024. The animal health company reported adjusted earnings per share (EPS) of $1.58, a 16% year-over-year increase, surpassing the consensus estimate of $1.46. Revenue for the quarter also came in strong at $2.39 billion, beating the consensus estimate of $2.29 billion and representing an 11% year-over-year increase. On an operational basis, revenue for the third quarter of 2024 climbed 14% compared to the same period in 2023.
This robust performance was driven by the company’s diverse, science-driven portfolio and its customer-centric approach, as highlighted by Zoetis CEO Kristin Peck. “Building on the strong momentum from the first half of the year, we are proud to have delivered another excellent quarter, fueled by our diverse, durable, and science-driven portfolio and our customer obsession that underscore our market leadership,” Peck stated. She further emphasized the strong performance across both the companion animal and livestock segments, with global operational growth of 15% and 11%, respectively. This includes a notable 15% revenue growth in the U.S. market.
Riding on the positive momentum, Zoetis increased its 2024 revenue guidance to a range of $9.2 billion to $9.3 billion, a significant upgrade from the previous guidance of $9.1 billion to $9.25 billion and surpassing the consensus estimate of $9.194 billion. This translates to an anticipated operational growth of 10% to 11%. The company also raised its 2024 adjusted EPS guidance to $5.86 to $5.92, compared to the prior guidance of $5.78 to $5.88 and the consensus estimate of $5.82. Zoetis is projecting adjusted net income between $2.67 billion and $2.695 billion, representing an operational growth of 13.5% to 14.5%. This translates to a reported net income of $2.435 billion to $2.450 billion.
Analysts are encouraged by the company’s performance, particularly in the companion animal segment. William Blair, in its analysis, stated that the companion animal segment is the main driver of sentiment for Zoetis shares. The firm was pleased to see 15% global growth in this segment, despite concerns about competition and market noise. Based on the strong third-quarter results, William Blair reaffirms its Outperform rating for Zoetis, suggesting that the company is on track for double-digit EPS growth in 2025.
While the company’s positive performance was met with strong interest, ZTS stock experienced a dip of 3.88% to $174.86 on Monday. The market’s reaction suggests that investors are closely watching Zoetis’ future prospects, particularly the guidance and insights for 2025 that will be provided during the company’s next earnings call. This information will be key in determining valuation growth for the company going forward.
