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Zoetis (ZTS) to Report Q3 Earnings: What's in the Cards?

Zacks Equity Research

Zoetis Inc. ZTS is slated to report third-quarter 2019 results on Nov 7, before market open.

The company has an excellent earnings surprise history, surpassing expectations in the trailing four quarters with average positive earnings surprise of 7.89%.

Zoetis’ share price has soared 45.8% year to date compared with the industry’s growth of 4.2%.

 Let's see how things are shaping up for this announcement.

Factors to Consider

Zoetis derives a majority of revenues from a diversified product portfolio of medicines and vaccines used to treat and protect livestock and companion animals. The company reports results under two geographical operating segments — the United States and International.

Solid sales from the dermatology portfolio and the Abaxis acquisition strengthened the United States segment in the second quarter, a trend that most likely continued in the third quarter. The company’s companion animal business has been performing well, a trend most likely continued in the third quarter.

Apoquel and other product launches continue to drive growth in the companion animal portfolio. Key dermatology products like Apoquel and Cytopoint, new products such as Simparica and Stronghold Plus, and increased medicalization rates in key international markets such as China and Brazil must have driven growth further in the third quarter.

Apart from the top and bottom-line numbers, investors will focus on pipeline updates.

In July, the company received a positive opinion from the European Medicines Agency's Committee for Medicinal Products for Veterinary Use for its three-way combination parasiticide for dogs, and the final decision from the European Commission is expected later in the year. Regulatory reviews are also underway in the United States, Canada, Australia, Brazil and Japan, with further submissions expected in China and Mexico this year. If approved, Zoetis anticipates bringing this product to the European and the U.S. markets in 2020.

The company also gained FDA approval of ProHeart 12 (moxidectin), the industry’s only once-yearly injection to prevent heartworm disease in dogs aged 12 months or above.

Additionally, California-based Abaxis, acquired in 2018, is anticipated to have significantly contributed to sales in the to-be-reported quarter.

In August 2019, Zoetis completed the acquisition of Platinum Performance, a privately-held nutrition-focused animal health company, after fulfilling all closing requirements. This is expected to lead to increased focus on health and wellness as part of the continuum of animal care.

We expect the company to throw more light on other pipeline updates along with the upcoming quarterly results.

What Our Model Indicates

Our proven model does not conclusively predict an earnings beat for Zoetis this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here, as you will see below.

Earnings ESP: Zoetis has an Earnings ESP of 0.00%, as both the Zacks Consensus Estimate and the Most Accurate Estimate are pegged at 89 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company carries a Zacks Rank #2.

Zoetis Inc. Price and Consensus

 

Zoetis Inc. Price and Consensus

Zoetis Inc. price-consensus-chart | Zoetis Inc. Quote

Stocks That Warrant a Look

Here are some stocks you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter.

Amicus Therapeutics Inc. FOLD has an Earnings ESP of +3.98% and a Zacks Rank of 2. The company is scheduled to release third-quarter results on Nov 11, before market open. You can see the complete list of today’s Zacks #1 Rank stocks here.

Eyenovia, Inc. EYEN is scheduled to release third-quarter results on Nov 13, after market close. The company has an Earnings ESP of +10.51% and a Zacks Rank #2.

Ascendis Pharma A/S ASND has an Earnings ESP of +8.03% and a Zacks Rank of 2. The company is scheduled to release results on Nov 18

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