Zoetis 2025 Q1 Earnings Beats Expectations as Net Income Grows 5%

Zoetis reported its fiscal 2025 Q1 earnings on May 6th, 2025. The company surpassed Wall Street estimates, with adjusted EPS of $1.48 against the consensus of $1.39, reflecting an 8% organic operational growth. Zoetis also raised its full-year 2025 guidance, projecting revenue between $9.425 billion and $9.575 billion, surpassing prior expectations. The company's adjusted net income guidance was also increased, now expected to be between $2.775 billion and $2.825 billion, indicating continued confidence despite the external challenges.

Revenue

In the first quarter of 2025, Zoetis achieved a total revenue of $2.22 billion, marking a 1.4% year-over-year growth. The U.S. segment generated $1.2 billion, a 2% increase from 2024, supported by a 6% organic operational growth, while companion animal product sales surged by 8%, driven by products like Simparica Trio and Apoquel. International revenue remained stable at $1.0 billion on a reported basis, with an impressive 11% organic operational growth.

Earnings/Net Income

Zoetis's EPS increased by 7.6% to $1.41 in 2025 Q1 from $1.31 in 2024 Q1, showcasing solid earnings growth. The net income rose 5.3% to $631 million from $599 million in the previous year. Overall, the EPS performance for Zoetis was strong, indicating continued profitability and stable business performance.

Post-Earnings Price Action Review

The strategy of purchasing Zoetis shares after a quarter-over-quarter revenue drop and holding for 30 days led to a 13.78% return, which significantly underperformed compared to a benchmark return of 83.12%. The strategy exhibited a compound annual growth rate of 2.65%, alongside a maximum drawdown of -6.95% and a Sharpe ratio of 0.51, reflecting moderate risk-return characteristics. Despite the earnings beat and raised guidance, Zoetis's stock experienced a decline, indicating market volatility or investor sentiment concerns.

CEO Commentary

"Zoetis achieved strong results for the first quarter of 2025, driven by demand for our innovative products and our focus on delivering for our customers," said Kristin Peck, Chief Executive Officer of Zoetis. The 9% organic operational revenue growth reflects the essential nature of the business and the strength of its diversified portfolio. Despite evolving external conditions, the company remains agile and disciplined in its commitment to supporting customers and delivering value to shareholders.

Guidance

Zoetis updated its full-year 2025 revenue guidance to a range of $9.425 billion to $9.575 billion, accounting for foreign exchange impacts. The company maintains its outlook for organic operational revenue growth at 6% to 8% and adjusts guidance for organic operational growth in adjusted net income to 5% to 7%, considering enacted tariffs. Adjusted diluted EPS guidance is revised to $6.20 to $6.30, reflecting foreign exchange and tariff impacts.

Additional News

In recent company developments, Zoetis received approval for its Avian Influenza Vaccine, H5N2 Subtype, for use in chickens in the U.S. and Canada, marking a significant stride in its livestock segment. Additionally, Simparica Trio gained a new label indication in the U.S. to prevent flea tapeworm infections, enhancing its companion animal product offerings. Furthermore, Zoetis expanded its recombinant vector vaccine portfolio for poultry with approvals in the EU and Brazil, reinforcing its commitment to innovation and growth in animal health solutions.

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