Zoetis (ZTS) Beats On Q4 Earnings & Sales, Shares Up
Zacks Investment Research | Feb 14, 2019 02:02AM ET
Zoetis Inc. (NYSE:ZTS) posted fourth-quarter 2018 adjusted earnings of 79 cents per share (excluding one-time items), which increased 14.5% year over year from 69 cents and beat the Zacks Consensus Estimate of 77 cents.
Total revenues rose 7.1% year over year to $1.56 billion and marginally beat the Zacks Consensus Estimate of $1.52 billion.
Shares went up in pre-market following the earnings announcement. Zoetis’ share price movement shows that the stock has outperformed the industry in the past year. The stock has gained 19.3%, against the industry’s decline of 17.1%.
Quarterly Highlights
Zoetis reports business results under two geographical operating segments — the United States and International. The company has a diverse portfolio of products for livestock and companion animals.
Revenues from the United States segment increased 14% year over year to $809 million. Sales of companion animal products in this region were up 26%, primarily due to higher sales of dermatology portfolio and Simparica, and the acquisition of Abaxis. This was partially offset by lower sales of some in-line products, due to anticipated competition. Livestock revenues increased 3%..
Revenues at the International segment decreased 2% year over year on a reported basis (up 5% operationally) to $727 million. Livestock sales declined 6% (up 2% operationally) in the quarter. Sales of cattle products were relatively flat in the quarter. Increased revenues in poultry products were the result of solid performance in other emerging markets, including Egypt and Indonesia.
Moreover, sales of companion animal products grew 7% on a reported basis, reflecting higher sales of dermatology portfolio and two new parasiticide products — Simparica (sarolaner) for dogs and Stronghold Plus (selamectin/sarolaner) for cats. The acquisition of Abaxis also fueled growth.
Full-Year 2018 Results
For 2018, adjusted earnings came in at $3.13 per share, up from the year-ago earnings of $2.4.
Revenues increased 10% year over year to $5.83 million in 2018.
2019 Outlook
The company expects adjusted earnings of$3.42-$3.52per share. Revenues are expected to be $6.175-$6.300 billion.
The Zacks Consensus Estimate for earnings and revenues is pegged at $3.42 and $6.28 billion, respectively.
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The guidance reflects foreign exchange rates as of late January.
Other Updates
Zoetis received approval in the United States and Canadafor Revolution Plus (selamectin and sarolaner topical solution), a new combination topical product for cats and kittens that provides parasite protection against fleas, ticks, ear mites, roundworms, hookworms and heartworms.
The company also continued to bring its newest leading canine products to additional markets. Cytopoint (lokivetmab), a monoclonal antibody that is part of Zoetis’ canine dermatology portfolio, and Simparica, an oral flea and tick medication for dogs, received additional approvals in countries in Asia and the Middle East.
Our Take
Zoetis’ fourth-quarter results exceeded both earnings and sales expectations on the back of growth from new parasiticide products (Simparica and Stronghold Plus), vaccines, strong dermatology portfolio and the addition of the Abaxis’ diagnostics portfolio.
Zacks Rank and Stocks to Consider
Zoetis currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks are GlaxoSmithKline (NYSE:GSK) , Bristol-Myers Squibb (NYSE:BMY) and Array BioPharma Inc. (NASDAQ:ARRY) . While GlaxoSmithKline sports a Zacks Rank #1 (Strong Buy), Bristol-Myers and Array BioPharma carry a Zacks Rank #2 (Buy). You can see .
GlaxoSmithKline’s earnings per share estimates have increased from $2.86 to $2.95 for 2019 and from $2.94 to $3.01 for 2020 in the past 60 days. The company delivered a positive earnings surprise in two of the trailing four quarters, with average of 3.74%.
Bristol-Myers’ earnings per share estimates have increased from $4.07 to $4.16 for 2019 in the past 60 days. The company delivered a positive earnings surprise in all the trailing four quarters, with average of 14.26%.
Array BioPharma’s loss per share estimates have narrowed from 65 cents to 60 cents for 2019 in the past 60 days. The company delivered a positive earnings surprise in three of the trailing four quarters, with average of 40.40%.
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