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Zoetis (ZTS) to Report Q4 Earnings: What's in the Cards?

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Zacks Equity Research
·4 min read
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Zoetis Inc. ZTS is scheduled to report fourth-quarter 2020 results on Feb 16, before market open.

The company flaunts an excellent earnings surprise history, surpassing expectations in the trailing four quarters by 17.74%, on average. In the last reported quarter, the company delivered an earnings surprise of 23.60%.

Shares of Zoetis have increased 11.5% in the past year compared with the industry’s growth of 8.6%.

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

What Our Model Indicates

Our proven model predicts 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, which is the case here as you will see below.

Earnings ESP: Zoetis has an Earnings ESP of +2.59%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

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 strengthened the United States segment in the last reported quarter, a trend that most likely continued in the fourth quarter too. The company’s companion animal business has been performing well as well. The Simparica franchise, including some initial stocking of Simparica Trio, the new triple combination parasiticide, continues to drive growth for the companion animal portfolio.

Sales of livestock products increased in the third quarter owingto a return to historical buying patterns following the impact of COVID-19 in the second quarter, as well as an earlier fall cattle run compared to the same period last year.Cattle growth in the United States was partially offset by declines in both poultry and swine product portfolios. We expect the trend to continue in the fourth quarter.

For the International segment, sales of companion animal products increased in the third quarter due to the impact of COVID-19 and also drovesales across the company’s companion animal portfolio in China as a result of favorable market conditions and additional promotional and educational effort. Sales also benefited as clinics expanded their operations following less COVID-19-related restrictions. The trend is expected to have continued in the fourth quarter as well. The company’s cattle portfolio grew modestly based on a strong performance in Brazil.

In November 2020, the European Commission granted the company a marketing authorization for Librela (bedinvetmab), the first injectable monoclonal antibody (mAb) therapy approved in the European Union for monthly alleviation of osteoarthritis (OA) pain in dogs. It is an important milestone in the company’s innovative pipeline for pain management in pets. Librela is the first injectable mAb licensed for the alleviation of pain associated with OA in dogs.

During the third quarter, the company raised its guidance to reflect its current outlook for the year. The company expects adjusted earnings between $3.76 and $3.81 per share for 2020 compared with the previous guidance of $3.52-$3.68.The company raised its revenue guidance for 2020 to $6.550-$6.625 billionfrom the previous range of $6.300-$6.475 billion.

Other Stocks That Warrant a Look

Here are some biotech stocks with the right mix of elements to beat on earnings this time around:

Cara Therapeutics Inc. CARA has an Earnings ESP of +34.38% and a Zacks Rank #3.

Immunovant Inc. IMVT has an Earnings ESP of +4.55 % and a Zacks Rank #2.

Atea Pharmaceuticals Inc. AVIR has an Earnings ESP of +279.59% and a Zacks Rank #2.

Zoetis Inc. Price and Consensus

Zoetis Inc. Price and Consensus
Zoetis Inc. Price and Consensus

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

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