Zoetis Inc.
Orin's own judgment of how firmly the evidence points one way — not the chance the price goes up.
Zoetis trades at $71.55 as of 7 Oct—roughly 27% below its 200-day moving average of $97.58 and at 2017 price levels—despite maintaining best-in-class margins (70.5% gross, 38.0% operating for FY2025) and generating $2.28B in free cash flow.
At 11.77x P/E (43% below the peer median of 20.72x) and 9.75x EV/EBITDA (29% below peers), the market has priced in the worst-case scenario of flat near-term revenue and eroding pricing power, but the underlying franchise still produces substantial cash that supports aggressive buybacks and a robust pipeline of 12 candidates that could offset patent expiries. The MACD histogram just turned positive (0.14) and smart-money scores are inflecting from negative toward slightly positive, suggesting sentiment may be bottoming even as Q2 2026 revenue growth was essentially flat at 0.33% YoY.
What could go wrong
- Revenue stagnation persists. Q2 2026 revenue grew just 0.33% YoY and Q1 2026 only 1.9%, far below the 8.3% FY2024 growth rate; if companion-animal demand and pricing don't recover, the low-single-digit top line could justify the depressed multiple.
- Leverage has spiked. Total debt jumped from $6.74B at FY2024 to $9.49B at FY2025 while stockholders' equity fell from $4.77B to $3.33B, materially raising balance-sheet risk if revenue doesn't reaccelerate.
- Patent cliff beyond 2030. Apoquel and Simparica patent expiries in 2030/2032 threaten key revenue streams; the pipeline of 12 candidates must deliver to offset potential erosion.
- Competitive pressure in parasiticides/dermatology. Intensifying competition in heartworm and parasiticide products could pressure volumes and pricing, further compressing the already-slowing top line.
What would change my mind
Where this comes from: peer comparison · FY25 fundamentals · FY24 and FY25 fundamentals · Q1–Q2 FY26 results. Orin's read on ZTS; not advice.
How has the share price moved?
Down 47.0% over twelve months, from $147.53 on 27 Oct 2025 to $78.23 at the Tue 27 Oct 2026 close. Its highest close in that time was $147.53 on 27 Oct 2025; the last close is 47.0% below it.
- Green line: the closing price each trading day.
- Grey line: the average closing price over the last 50 trading days.
- Dashed amber line: the same over the last 200 trading days — a slower, smoother line.
- Bars along the bottom: shares traded each day — green when it closed higher than the day before, rose when lower (the most, 29.9M, on 7 May 2026).
- Flags: the company's filings, on the day they were made (a 10-Q is the quarterly report and a 10-K the annual report; an 8-K reports a major event).
On file
All ZTS filingsLargest holders · 13F Q2 2026
Money flow| Filer | Position | Of fund |
|---|---|---|
| BlackRock | $2.8B | 0.0% |
| Vanguard Capital Management | $1.9B | 0.0% |
| Vanguard Portfolio Management | $1.7B | 0.1% |
| State Street | $1.4B | 0.0% |
| Geode Capital Management | $951.8M | 0.1% |
| Wellington Management Group | $677.2M | 0.1% |
| Morgan Stanley | $638.0M | 0.0% |
| Northern Trust | $398.3M | 0.0% |
| Invesco | $396.9M | 0.0% |
| Norges Bank | $337.0M | 0.0% |
114 of the 815 filers we track · quarter ended Q2 2026 · positions, not flows
Insiders, last 24 months: 254 Form 4 filings; open-market trades net −$2.0M. 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 →How is it priced, against its own past and its sector?
Priced at 13.9× its last 12 months of profit (Thu 5 Nov close) — lower than in all 5 of its last 5 fiscal years (middle 32.5×); the typical Healthcare company on the NYSE is at 25.8×.
| Measure | Now | Its usual | Sector |
|---|---|---|---|
| P/E | 13.9×below usual | 32.5× | 25.8× |
| P/S | 3.57×below usual | 8.50× | — |
| EV/EBITDA | 8.5×below usual | 21.8× | — |
| P/B | 10.2×below usual | 16.7× | — |
- "Its usual" is the middle of its own last 5 fiscal years.
P/E: the share price divided by one year of profit per share — roughly how many years of today's profit the price pays for. A company that loses money has no P/E.
P/S: the company's total market value divided by one year of revenue. Used when there is no profit to measure.
EV/EBITDA: the price of the whole company (its shares plus its debt, minus its cash) divided by one year of operating profit before interest, tax and write-downs.
P/B: the share price divided by the book value per share — what the company owns minus what it owes, as its accounts record it. When book value is tiny, P/B swings wildly and says little.
What do the analysts who cover it publish?
The analysts' average 12-month price target is $85.13 (from $74 to $95) — 9% above the Tue 27 Oct close price. That is their published opinion, not Orin's.
$85.13
$74 – $95 · +9% against the last close
- 7 buy or overweight
- 9 hold
- 0 underweight or sell
Price target: the share price an analyst publishes for about 12 months ahead. It is the opinion of the firm that wrote it; the average is across the firms that cover the company.
Overweight / underweight: analysts' rating words: overweight means the firm expects the stock to do better than the others it covers, underweight worse. Their words, not Orin's.
How is it priced next to the companies it is compared to?
Priced at 13.9× its last 12 months of profit. Only 2 of the 2 companies it is compared to made a profit (IDXX 39.4×, MRK 113×), so there is no typical P/E.
| Company | Market value | P/E | EV/EBITDA | Gross margin | Net margin | ROE |
|---|---|---|---|---|---|---|
| ZTSZoetis Inc. | $34B | 13.9× | 8.5× | 71.0% | 26.1% | 76% |
| IDXXIDEXX Laboratories, Inc. | $44B | 39.4× | 27.9× | 62.4% | 25.0% | 72% |
| MRKMerck & Co., Inc. | $350B | 113× | 28.5× | 75.4% | 4.8% | 7% |
- The list of companies is the data vendor's choice, so it can include a company a person would not have picked.
Market value: the share price times the number of shares — what the whole company is priced at.
P/E: the share price divided by one year of profit per share — roughly how many years of today's profit the price pays for. A company that loses money has no P/E.
EV/EBITDA: the price of the whole company (its shares plus its debt, minus its cash) divided by one year of operating profit before interest, tax and write-downs.
Gross margin: the share of each $1 of sales left after the direct cost of making what was sold.
Net margin: the share of each $1 of sales kept as profit after every cost. Below zero, the company lost money.
ROE: return on equity: one year of profit as a share of the shareholders' money in the business (its book value).
Is it priced high or low compared with its own past?
Priced at 13.9× its last 12 months of profit (Thu 5 Nov close). It has no full fiscal year on file since its history starts, so there is nothing of its own to compare with.
- Now13.9×
P/E: the share price divided by one year of profit per share — roughly how many years of today's profit the price pays for. A company that loses money has no P/E.
Fiscal year (FY): the company's own 12-month accounting year, which need not match the calendar year.
How has its sector been priced?
Healthcare companies on the NYSE were priced at a typical 25.8× their yearly profit (Tue 27 Oct close).
- Now25.8×
- Each year is the middle of that calendar year's daily sector P/E; "Now" is the Tue 27 Oct close figure, the same one in the table above.
Sector P/E: the middle P/E of the companies in the same sector on the same stock exchange, as the data vendor works it out each day.
What does a cash-flow model say a share is worth?
A standard cash-flow model puts it at $161 a share — 105% above the $78.59 price it was computed against (27 Oct).
| Model | Value a share | Against the price then |
|---|---|---|
| Standard | $161 | 105% above $78.59 |
| Levered | $155 | 97% above $78.59 |
Discounted cash flow: a model's estimate of what the company is worth today, from the cash it is forecast to make in future years. Small changes in the forecast move it a lot, and it says little about a company that loses money.
Standard / levered: two versions of the cash-flow model: the standard one counts the cash before the company pays its lenders, the levered one after.