A significant driver of top-line growth: Zoetis Inc. (ZTS)

Zoetis Inc. (NYSE: ZTS) stock fell -3.25% on Friday to $174.31 against a previous-day closing price of $180.16. With 2.39 million shares changed hands, the volume of the stock remained heavier than its average volume of 1.99 million shares. During the session, the Drug Manufacturers – Specialty & Generic company that operates in wider Healthcare sector, reached to the highest price of $181.90 whereas the lowest price it dropped to was $172.82. The 52-week range on ZTS shows that it touched its highest point at $249.27 and its lowest point at $154.18 during that stretch. It currently has a 1-year price target of $229.18. With its current market cap of 79.75 billion, ZTS has annualized dividend of $1.30 while the current yield stands at 0.75%. Beta for the stock currently stands at 0.73.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of ZTS was down-trending over the past week, with a drop of -4.37%, but this was down by -2.35% over a month. Three-month performance dropped to -1.44% while six-month performance fell -13.78%. The stock lost -14.88% in the past year, while it has lost -28.57% so far this year. A look at the trailing 12-month EPS for ZTS yields 4.36 with Next year EPS estimates of 5.73. For the next quarter, that number is 1.22. This implies an EPS growth rate of 24.80% for this year and 13.16% for next year. EPS is expected to grow by 11.05% annually over the next five years; however, over the past five years, the company experienced an annual growth rate of 21.00%.

Float and Shares Shorts:

At present, 472.20 million ZTS shares are outstanding with a float of 469.48 million shares on hand for trading. On Jul 14, 2022, short shares totaled 3.39 million, which was 0.72% higher than short shares on Jun 14, 2022. In addition to Ms. Kristin C. Peck as the firm’s CEO & Director, Mr. Glenn C. David serves as its Exec. VP and Group Pres of International Operations, Aquaculture, BioDevices & Pet Insurance.

Institutional Ownership:

Through their ownership of 93.83% of ZTS’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 48.11% of ZTS, in contrast to 45.51% held by mutual funds. Shares owned by individuals account for 27.32%. As the largest shareholder in ZTS with 7.22% of the stake, The Vanguard Group, Inc. holds 34,000,487 shares worth 34,000,487. A second-largest stockholder of ZTS, BlackRock Fund Advisors, holds 22,279,132 shares, controlling over 4.73% of the firm’s shares. SSgA Funds Management, Inc. is the third largest shareholder in ZTS, holding 19,693,339 shares or 4.18% stake. With a 2.65% stake in ZTS, the Vanguard Total Stock Market Index is the largest stakeholder. A total of 12,491,900 shares are owned by the mutual fund manager. The Vanguard 500 Index Fund, which owns about 2.21% of ZTS stock, is the second-largest Mutual Fund holder. It holds 10,417,210 shares valued at 1.79 billion. American Funds New Perspective Fu holds 1.13% of the stake in ZTS, owning 5,301,411 shares worth 911.26 million.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for ZTS since 15 analysts follow the stock currently. There are 10 analysts who recommend BUY ratings, while 0 suggest SELL ratings. Of the remaining analysts, 3 believe that the stock is worth HOLDING, 2 give it an OVERWEIGHT rating, and 0 thinks that it’s UNDERWEIGHT. In the same way, a target price assigned to a stock can also reveal much about its potential. With ZTS analysts setting a high price target of $264.00 and a low target of $202.00, the average target price over the next 12 months is $230.10. Based on these targets, ZTS could surge 51.45% to reach the target high and rise by 15.89% to reach the target low. Reaching the average price target will result in a growth of 32.01% from current levels.

EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy. ZTS will report FY 2022 earnings on 02/16/2023. Analysts have provided yearly estimates in a range of $5.23 being high and $4.95 being low. For ZTS, this leads to a yearly average estimate of $5.05. The earnings surprise of a firm occurs when the actual results change from the consensus earnings estimate. Zoetis Inc. surprised analysts by -$0.01 when it reported $1.20 EPS against a consensus estimate of $1.21. The surprise factor in the prior quarter was $0.09. Based on analyst estimates, the high estimate for the next quarter is $1.29 and the low estimate is $1.13. The average estimate for the next quarter is thus $1.21.

Summary of Insider Activity:

Insiders traded ZTS stock several times over the past three months with 3 Buys and 3 Sells. In these transactions, 4,645 shares were bought while 6,500 shares were sold. The number of buy transactions has increased to 34 while that of sell transactions has risen to 48 over the past year. The total number of shares bought during that period was 217,578 while 188,176 shares were sold.

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