Zoetis Inc. ZTS
Zoetis is a hold after cutting its 2026 outlook on softening pet healthcare demand and rising competition, with Q2 revenue flat at $2.5B and management reducing full-year guidance. The valuation is genuinely compelling at 12.7x P/E and 8.0x EV/EBITDA—roughly 40% below peer medians—but a 33% gap below the 200-day moving average, $9.49B in total debt against just $3.33B in equity, and deteriorating near-term momentum argue for patience until demand trends stabilize.
The franchise remains high-quality with 70.5% gross margins and $2.28B in free cash flow, which limits downside, but calling a bottom ahead of a guidance cut with no clear inflection signal is premature.
What could go wrong
- Demand deterioration. Softer pet healthcare demand cited in Q2 2026 results could persist or worsen, compressing revenue growth that has already stalled at flat YoY in Q2.
- Competitive pressure. Increased competition in animal health markets weighing on pricing and volumes; no visibility on when competitive dynamics normalize.
- Balance sheet leverage. Total debt surged from $6.74B to $9.49B in one year while stockholders' equity fell from $4.77B to $3.33B, suggesting aggressive buybacks funded by debt that constrain financial flexibility.
- Technical breakdown. Stock trading at $72.66 vs 200-day MA of $108.76—a 33% discount—with RSI at 40 and MACD negative, indicating persistent bearish momentum that could attract further selling.
What would change my mind
Where this comes from: peer_relative · fundamentals FY2025 · fundamentals FY2024–FY2025 · technicals as of 2026-08-07. Orin's read on ZTS; not advice.
Twelve months actual closes to 2026-09-23 · actual filings
50-day average 200-day average · volume below
On file
All ZTS filingsLargest holders · 13F Q2 2026
Money flow| Filer | Position | Of fund |
|---|---|---|
| Vanguard Capital Management | $1.9B | 0.0% of fund |
| Vanguard Portfolio Management | $1.7B | 0.1% of fund |
| State Street | $1.4B | 0.0% of fund |
| Geode Capital Management | $951.8M | 0.1% of fund |
| Wellington Management Group Llp | $677.2M | 0.1% of fund |
| Morgan Stanley | $638.0M | 0.0% of fund |
111 filers · quarter ended Q2 2026 · positions, not flows
Insiders, last 24 months: 243 Form 4 filings, net $27.4M. Of the 50 on hand, 2 were open-market purchases and 0 sales— the rest are grants, option exercises and tax withholding.
Ask Orin about ZTS
Orin answers questions about ZTS from its filings, transcripts and numbers — with the source behind every claim. Your own desk starts with 3 free days, card required.
Start 3 free days →Where it trades
| Metric | Now | Own median | Sector |
|---|---|---|---|
| P/E | 11.8× | 32.5× | 26.4× |
| EV/EBITDA | 9.8× | 21.8× | — |
| P/S | 3.16× | 8.50× | — |
| P/B | 9.5× | 16.7× | — |
Its P/E sits below all 5 of the last 5 years (−2.00σ from its own mean).
2.0%
free-cash-flow growth every year for 10 years, discounted at 10%, is what today’s price implies — starting from $2.3B of trailing free cash flow. It is an assumption the market is making, not a forecast Orin is making.
What Wall Street published
$87
$80 – $95 · +22% against today's price
- 15 buy or overweight
- 17 hold
- 0 underweight or sell
The analysts’ consensus and their own ratings, not Orin’s. A target is a twelve-month opinion published by the firm that wrote it.
Against the companies it is compared to
| Company | Market cap | P/E | EV/EBITDA | Gross | Net | ROE |
|---|---|---|---|---|---|---|
| ZTSZoetis Inc. | $30B | 11.8× | 9.8× | 70.9% | 27.5% | 69% |
| BDXBecton, Dickinson and Company | $50B | 55.0× | 17.0× | 46.1% | 4.5% | 4% |
| CICigna Corporation | $71B | 11.1× | 8.2× | 11.7% | 2.3% | 15% |
| CORCencora, Inc. | $61B | 23.1× | 13.6× | 3.7% | 0.8% | 106% |
| ELVElevance Health Inc. | $86B | 17.7× | 13.4× | 39.0% | 2.5% | 11% |
| IDXXIDEXX Laboratories, Inc. | $41B | 36.7× | 26.0× | 62.4% | 25.0% | 72% |
| REGNRegeneron Pharmaceuticals, Inc. | $83B | 19.1× | 14.3× | 84.9% | 27.9% | 14% |
The median is of the 6 peers listed above and nothing else — check it against the column. This company trades 44.2% below it. The peer set is the vendor’s, so a company can appear here that a person would not have chosen.
What it has traded at
What its sector has traded at
Two scales, drawn separately on purpose: a sector median and one company’s multiple are not the same number and putting them on one axis invites a comparison neither series supports.
Discounted cash flow
| Model | Fair value | Against | Computed |
|---|---|---|---|
| Standard DCF | $193 | $81.73 · +136% | 2026-06-10 |
| Levered DCF | $186 | $81.73 · +128% | 2026-06-10 |
The vendor’s intrinsic-value models. Treat them as a low-growth anchor — for a fast grower the market routinely pays well above a DCF. These were computed against the price in the “against” column, not today’s.
Every estimate on one scale
The vertical rule is the current price. Ranges and point estimates are the backend’s, published as they were calculated; an arrow means the estimate sits beyond this scale, and its number is on the right.