What Happened?
Shares of animal health company Zoetis (NYSE: ZTS) fell 12.6% in the morning session after the company reported mixed third-quarter results and cut its full-year sales forecast. Although its adjusted earnings of $1.70 per share beat Wall Street's estimates, revenue of $2.4 billion was flat year-over-year and met expectations. More concerning for investors, Zoetis lowered its full-year revenue guidance to a midpoint of $9.44 billion, a 0.9% decrease from its previous forecast. The company's operating margin also compressed, falling to 37% from 38.3% in the same quarter last year. Ultimately, the lowered sales outlook and margin pressure overshadowed the earnings beat.
The shares closed the day at $124.50, down 13.8% from previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Zoetis? Access our full analysis report here.
What Is The Market Telling Us
Zoetis’s shares are not very volatile and have only had 3 moves greater than 5% over the last year. Moves this big are rare for Zoetis and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 9 months ago when the stock dropped 10.6% on the news that the company reported disappointing fourth-quarter results: its full-year EPS and revenue guidance fell short of Wall Street's estimates. Revenue grew 5% year over year, as weakness in livestock sales, which declined due to the divestiture of certain products, was partly offset by strength in the companion animal segment. Looking ahead, Zoetis expects 6% to 8% organic operational revenue growth, but foreign exchange pressures and ongoing challenges could create headwinds. Overall, this quarter could have been better.
Zoetis is down 23.2% since the beginning of the year, and at $124.85 per share, it is trading 30.2% below its 52-week high of $178.84 from December 2024. Investors who bought $1,000 worth of Zoetis’s shares 5 years ago would now be looking at an investment worth $716.09.
Do you want to know what moves the business you care about? Add them to your StockStory watchlist and every time a stock significantly moves, we provide you with a timely explanation straight to your inbox. It’s free for active Edge members and will only take you a second.
