Zoetis Inc.


ZTS

posted fourth-quarter 2020 adjusted earnings of 91 cents per share (excluding one-time items), which was down from the year-ago quarter’s earnings of 92 cents but beat the Zacks Consensus Estimate of 86 cents.

Total revenues grew 8% year over year to$1.8 billion, which beat the Zacks Consensus Estimate of $1.73 billion.

Shares of Zoetis have increased 15.7% in the past year compared with the

industry

‘s growth of 0.9%.

Quarterly Highlights

Zoetis reports business results under two geographical operating segments — the United States and International. It has a diverse portfolio of products for livestock and companion animals.

Revenues from the United States segment increased 11% year over year to $952 million in the fourth quarter. Sales of companion animal products in this region grew 30%, primarily owing to higher sales of the SimparicaTrio, the recently launched triple combination parasiticide for dogs. Apoquel and Cytopoint brands in the dermatology portfolio also led to this increase. However, sales of livestock products decreased 15% in the quarter. Sales of cattle products declined year over year as a result of an earlier fall cattle run, supply constraints on vaccines and generic competition. Sales of both swine and poultry products also declined in the quarter due to unfavorable market conditions related to the COVID-19 pandemic.

Revenues inthe International segment increased 5% year over year on a reported basis (up 7% operationally) to $832 million. Livestock sales decreased 2% on a reported basis and increased 2% operationally.Notably, sales of swine products surged as a result of expanding herd production and beefed-up biosecurity measures in the wake of the African Swine Fever. Sales of companion animal products grew 17% on a reported and operational basis. The Simparica franchise, including Simparica Trio, which was recently launched in the EU, Canada and Australia, and the company’s key dermatology portfolio consisting of both Apoquel and Cytopoint brands led to the growth. Growth in the company’s fish portfolio was driven primarily by increased market share for salmon vaccines and the acquisition of Fish Vet Group.

Full-Year 2020 Results

Zoetis posted 2020 adjusted earnings of $3.85 per share (excluding one-time items), which increased from the year-ago earnings of $3.64 and beat the Zacks Consensus Estimate of $3.80.

Total revenues grew 7% year over year to$6.7 billion, which beat the Zacks Consensus Estimate of $6.60 billion.

2021 Guidance

Zoetis issued guidance for 2021.

The company expects adjusted earnings of$4.36-$4.46 per share.

Revenues are projected between $7.400 billion and $7.550 billion.

Our Take

Zoetis’ exceeded fourth-quarter earnings and sales estimates, driven by a strong companion animal portfolio. The company expects to continue growing revenue faster than the market in 2021, driven by continued strength in petcare, ongoing expansion in markets outside the United States, especially China, and the acceleration of its diagnostics portfolio penetration.

Zacks Rank & Stocks to Consider

Zoetis currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the healthcare sector include

Acorda Therapeutics Inc.


ACOR

,

Atea Pharmaceuticals Inc.


AVIR

and

Clearside Biomedical Inc.


CLSD

. All carry a Zacks Rank #2 (Buy). You can see


the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here



.

Acorda’s loss per share estimates have narrowed from $9.66 to $8.48 for 2020 and from $9.60 to $7.33 for 2021 over the past 60 days.

Atea’s earnings per share estimates have increased from $3.53 to $3.70 for 2021 over the past 60 days. Shares of the company have increased 170.3% in the past year.

Clearside’s loss per share estimates have narrowed from 37 cents to 36 cents for 2020 and from 38 cents to 30 cents for 2021 over the past 60 days. Shares of the company have increased 52% in the past year.

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