Zoetis Plummets 12.9%: Earnings Beat vs. Guidance Cut Sparks Selloff – What’s Next?

Summary
• Zoetis (ZTS) slumps 12.9% to $125.72, its lowest since November 2022, after slashing 2025 sales guidance despite beating EPS estimates.
• Q3 revenue flat at $2.4B, with full-year sales outlook cut to $9.44B (midpoint), 0.9% below estimates.
• Options frenzy: 2025-11-21 put options at $125 strike see 520% price change, while 2025-12-19 puts at $120 surge 747%.

Zoetis’ stock is in freefall after a mixed earnings report that highlighted slowing demand and macro-driven guidance cuts. With the 52-week low now at $122.03, the sell-off has triggered a surge in put options trading and raised questions about the sustainability of its long-term growth narrative.

Guidance Cut Overshadows EPS Beat, Triggers Investor Flight
Zoetis’ 12.9% intraday drop stems from a stark disconnect between its earnings performance and revised guidance. While the company exceeded adjusted EPS estimates by 4.8% ($1.70 vs. $1.62) and maintained its $6.30–$6.40 EPS target, it slashed full-year revenue guidance to $9.44B (midpoint), a 0.9% miss from prior estimates. This downward revision, attributed to 'broader macro trends,' signals waning demand in its core animal health markets. The stock’s collapse to $125.72—just $0.69 above its 52-week low—reflects investor skepticism about its ability to offset currency headwinds and operational challenges.

Pharma Sector Weakness Amplifies Zoetis’ Pain
The pharmaceutical sector, led by Pfizer (PFE), is under pressure, with PFE down 1.64%. AbbVie’s recent revenue guidance boost to $60.9B contrasts sharply with Zoetis’ pessimism, highlighting divergent macro responses. While biotech peers like Gilead and Biogen are raising forecasts, Zoetis’ flat Q3 revenue and 37% operating margin (down from 38.3%) underscore its struggle to maintain profitability amid inflationary and FX pressures. This sector-wide caution amplifies Zoetis’ selloff, as investors rotate toward more resilient pharma plays.

Bearish Playbook: Puts and Pivotal Levels in a Volatile Setup
• Technical Indicators: 200D MA at $156.51 (far above current price), RSI at 53.4 (neutral), MACD at -0.37 (bearish divergence).
• Key Levels: Bollinger Bands (Upper: $147.71, Middle: $144.30, Lower: $140.88); 30D support at $143.42.

Zoetis is in a short-term bearish trend, with the 52-week low looming as a critical support. Aggressive short-sellers may target the ZTS20251121P125 put option (strike: $125, expiration: 2025-11-21), which offers a 40.57% leverage ratio and 520% price change, capitalizing on the 5% downside scenario. A 5% drop to $119.43 would yield a put payoff of $5.57 per contract. For longer-dated exposure, the ZTS20251219P120 (strike: $120, expiration: 2025-12-19) boasts 43.67% leverage and 747% price change, with a projected $9.43 payoff at $119.43. Both contracts benefit from high gamma (0.0441 and 0.0250) and moderate delta (-0.44 and -0.30), ensuring sensitivity to price swings. The 2025-11-21 put chain’s $446,926 turnover confirms liquidity. If $125 breaks, these puts offer asymmetric risk-reward. Aggressive bulls may consider a limited bounce above $144.30 (30D MA) but face headwinds from the 200D MA and weak RSI.

Backtest Zoetis Stock Performance
I tried to identify every trading session between 2022-01-01 and 2025-11-04 in which Zoetis (ZTS) suffered an intraday plunge of at least –13 % (measured from that day’s high to its low or close). After calculating the drawdowns, no dates met or exceeded the –13 % threshold, so the event-date list came back empty. Because the back-test engine needs at least one event date to run, it returned an error.Recommended next steps 1. Relax the trigger size –13 % appears too strict for ZTS in this period. A –10 % or –8 % threshold is more typical for a single-day plunge filter and would likely yield events to test. 2. Alternatively, extend the look-back to include earlier years (e.g., from 2015) if you want to keep the –13 % rule.Please let me know which option you prefer (e.g., “test –10 % drops since 2020”) or suggest a different condition, and I will re-run the analysis accordingly.

Zoetis at Crossroads: Break Below $125 Could Cement Bearish Momentum
Zoetis’ 12.9% drop reflects a critical juncture between short-term bearish momentum and long-term growth potential. While its 5.8% expected revenue growth and 5.7% EPS guidance remain above sector averages, the immediate focus is on sustaining the $125 level. A breakdown below this would likely trigger a test of the $122.03 52-week low and accelerate put option activity. Meanwhile, sector leader Pfizer’s -1.64% decline underscores broader pharma sector fragility. Investors should monitor Zoetis’ ability to stabilize its guidance and navigate FX headwinds. For now, the ZTS20251121P125 and ZTS20251219P120 options offer high-leverage bearish exposure, but caution is warranted as a rebound above $144.30 could reignite optimism. Watch for $125 breakdown or guidance clarity.