Zoetis Inc (ZTS.N): 2Q26 Quick Take: Continued U.S. Companion Weakness Leads to Another Miss and Guide Down

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06 Aug 2026 08:13:03 ET │ 13 pages

Zoetis Inc (ZTS.N)

2Q26 Quick Take: Continued U.S. Companion Weakness Leads to

Another Miss and Guide Down

CITI'S TAKE

Buy / High Risk

Price (05 Aug 26 16:00)

US$74.39

Target price

US$112.00

Expected share price return

50.6%

Expected dividend yield

2.8%

Expected total return

53.4%

Market Cap

US$31,186M

This was another difficult quarter for ZTS with revenue down 1%

organically (missing our/cons. estimates by 1%/1.5%) driven primarily by

an 11% decline in U.S. Companion Animal amid persistent macro-driven

price sensitivity, lower clinic visits, and heightened competitive pressure.

Key franchises remained under meaningful pressure: Derm fell 16%

organically, OA Pain mAbs declined 3% organically (with canine down 8%,

partially offset by feline growth of 12%), and Parasiticides were flat

organically. On the bright side, Livestock delivered a strong +11% organic

growth, supported by favorable producer economics, elevated Dectomax

demand tied to New World screwworm, and poultry vaccine strength.

Diagnostics also outperformed, growing 12% organically. ZTS materially

cut FY'26 guidance, reducing revenue by ~$600M at the midpoint (to

$9.12B–$9.32B, organic (3)%–(1)%) and adj. EPS by ~$0.73 at the

midpoint (to $6.15–$6.25).

Daniel GrosslightAC

Luismario Higuera

Results — 2Q26 results were below expectations. ZTS reported revenue

of $2,468M (0.2% y/y; -1% organically), missing our/cons. estimates

by (0.9%)/(1.5%). Weakness was driven by Companion Animal. Total Companion

Animal revenue of $1,708M (4.6% y/y) missed our/cons. by (3.0%)/(4.0%), with

weakness concentrated in Key Derm (which declined 16% y/y and missed our/cons.

by 10/11%). OA Pain declined 3% organically with canine weakness offsetting growth

in feline. ZTS's Simparica franchse grew ~1% y/y (beating our estimate by 1% but

missing cons by ~2%). Total Livestock revenue grew 11% organically

to $731M and beat our/cons. by 3.9%/5.8%%, driven by favorable producer

economics, Dectomax demand, and poultry vaccine strength. Gross profit came in

at $1,799M (72.9% margin), missing our/cons. estimates by 0.8%/1.5%. Adj. EBIT

of $979M (39.7% margin) missed our/cons(5.0%)/(5.4%)%.…