Zoetis (ZTS) delivered impressive second-quarter results, characterized by operational revenue and net income growth. Buoyed better-than-expected results and underlying growth drivers, management has raised full-year guidance for revenue and adjusted net income.
Revenue was up 26% year-over-year to $1.9 billion in Q2, beating consensus estimates of $1.82 billion. Additionally, adjusted net income increased 33% year-over-year to $566 million, while adjusted earnings per share stood at $1.19, better than $1.08 a share that analysts expected.
Notably, strong performance of pet care parasiticides, key dermatology products, vaccines, and diagnostics acted as catalysts for the quarter, the company said. (See Zoetis stock charts on TipRanks)
“We remain in a strong position to invest both internally and externally in the innovations, market expansion and direct-to-consumer promotions that can support future growth,” said Zoetis CEO Kristin Peck.
Zoetis now projects revenues to be between $7.63 billion and $7.7 billion for the full-year 2021. Adjusted earnings per share are expected to range between $4.47 and $4.55 a share.
The company also plans to acquire Jurox, a privately held animal health company. The acquisition should enhance the company’s future growth opportunities, while also increasing its manufacturing capacity in Australia.
In response to upbeat Q2 results, Stifel Nicolaus analyst Jonathan Block reiterated a Buy rating on the stock and raised his price target to $220 from $185, implying 9.8% upside potential from current levels.
According to Block, “Zoetis has a history of keeping guidance conservative and frequently does not raise by as much as the beat. This occurred again in 2Q21 with EPS upside of $0.11 versus Street, but 2021 guidance increasing by ~$0.05. Nonetheless, we remain upbeat and again talk to why we believe our already-above Street 2022 revenue estimate may prove conservative.”
Consensus among analysts is a Moderate Buy based on 7 Buys and 3 Holds. The average Zoetis price target of $213.11 implies 6.4% upside potential to current levels.
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