Zoetis’ second quarter saw revenue and adjusted earnings surpass Wall Street expectations, but the market responded negatively, reflecting skepticism over the company’s performance trajectory. Management highlighted robust operational growth across its Companion Animal and Livestock segments, crediting strong execution in the Simparica and Key Dermatology franchises as major contributors. CEO Kristin Peck emphasized the enduring strength of Zoetis’ diversified portfolio despite competitive pressures and challenges with the osteoarthritis pain product Librela, noting, “Our consistent performance across economic and competitive cycles reinforces the strength of our business and animal health as one of the most compelling long-term growth sectors.”
Is now the time to buy ZTS? Find out in our full research report (it’s free).
Zoetis (ZTS) Q2 CY2025 Highlights:
- Revenue: $2.46 billion vs analyst estimates of $2.41 billion (4.2% year-on-year growth, 1.9% beat)
- Adjusted EPS: $1.76 vs analyst estimates of $1.61 (9.2% beat)
- Adjusted EBITDA: $1.07 billion vs analyst estimates of $1.07 billion (43.3% margin, 0.9% miss)
- The company slightly lifted its revenue guidance for the full year to $9.53 billion at the midpoint from $9.5 billion
- Management slightly raised its full-year Adjusted EPS guidance to $6.31 at the midpoint
- Operating Margin: 39%, up from 36.6% in the same quarter last year
- Constant Currency Revenue rose 5% year on year (11% in the same quarter last year)
- Market Capitalization: $66.38 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Zoetis’s Q2 Earnings Call
- Michael Ryskin (Bank of America) asked about competitive dynamics and the resilience of Simparica and Key Dermatology. CFO Wetteny Joseph explained that their first-mover advantage and disciplined promotion strategy helped maintain share, while CEO Kristin Peck discussed ongoing education efforts to accelerate Librela adoption.
- Erin Wright (Morgan Stanley) pressed on the sustainability of high-single-digit operational growth and margin trajectory into next year. Peck pointed to the diversity of Zoetis’ portfolio and the expectation of annual major approvals, while Joseph said cost management remains a focus but did not provide specific 2026 guidance.
- Brandon Vazquez (William Blair) sought clarity on Librela’s adoption barriers and the innovation pipeline timeline. Peck responded that veterinary demand for more clinical data is being addressed through third-party studies, with anticipated readouts starting in Q4.
- David Westenberg (Piper Sandler) inquired about strategies to maintain dermatology franchise share and the outlook for Cytopoint. Peck highlighted unique product positioning and ongoing investments in long-acting injectables, while Joseph emphasized the large under-treated pet population.
- Chris Schott (JPMorgan) asked about the growth potential for triple-combination parasiticides and the impact of new competitors. Joseph said the market is expected to double by 2028, and that increased awareness from competitors should benefit Zoetis’ leading products.
Catalysts in Upcoming Quarters
In the quarters ahead, our analysts will be watching (1) whether Librela’s adoption in the U.S. and international markets accelerates as new clinical data is published, (2) the impact of new product launches and pipeline approvals on top-line growth, and (3) continued expansion in alternative channels and international markets, especially as competitive pressures intensify. Execution on cost management and the ability to sustain margin gains will also be closely followed.
Zoetis currently trades at $149.77, down from $151.99 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).
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