Zoetis Shares Tumble as Safety Concerns Push Trading Volume to 194th Rank

Market Snapshot

On December 4, 2025, Zoetis (ZTS) experienced a 1.76% decline in share price, marking a continuation of its year-to-date (YTD) slump of 24.8%. The stock traded with a volume of $0.6 billion, ranking 194th in terms of trading activity among U.S.-listed equities. This performance reflects broader investor concerns over the company’s core osteoarthritis (OA) pain therapies, which have faced mounting regulatory and safety-related challenges. Despite maintaining a strong dividend history, Zoetis’s stock has underperformed relative to its sector, with a 29.9% annual drop compared to the industry’s 0.3% decline.

Key Drivers

Safety Concerns and Regulatory Scrutiny

Zoetis’s stock has been significantly pressured by persistent safety concerns surrounding its flagship monoclonal antibody OA pain treatments—Librela for dogs and Solensia for cats. The U.S. Food and Drug Administration (FDA) raised alarms in late 2024 after reviewing post-approval adverse event reports, identifying neurologic effects (ataxia, seizures, recumbency) and fatalities in treated dogs. While the agency characterized its communication as part of routine post-launch safety monitoring, the findings intensified scrutiny and underscored the need for enhanced adverse event reporting. Zoetis responded with a U.S. label update for Librela in February 2025, aligning with its own monitoring data. However, the company faced further criticism in May 2025 when a government analysis revealed that dogs treated with Librela reported musculoskeletal adverse events at nine times the rate of those on six other OA therapies. An independent expert panel linked these events to accelerated joint destruction, amplifying regulatory and investor skepticism.

Sales Declines and Revenue Guidance Cuts

The safety controversies directly impacted Zoetis’s financial performance, with Librela and Solensia posting year-over-year sales declines in both Q2 and Q3 2025. These setbacks forced the company to revise its full-year 2025 revenue guidance downward to $9.4–$9.475 billion, a reduction from the prior $9.45–$9.6 billion range. While Zoetis maintained its adjusted earnings per share (EPS) guidance of $6.30–$6.40, the revenue cut signaled waning confidence in its OA franchise. The stock’s 52-week low, reached in November 2025, remains a critical benchmark, with shares trading near this level amid ongoing uncertainty. Analysts attribute the sales declines to declining veterinary clinic visits, increased competition, and reduced patient starts due to safety-related hesitancy among veterinarians and pet owners.

Strategic Rebalancing and Future Opportunities

Amid the OA-related headwinds, Zoetis has sought to offset losses through growth in other segments of its companion-animal portfolio. Parasiticides (e.g., Simparica Trio) and dermatology treatments (e.g., Apoquel, Cytopoint) have driven robust momentum, partially cushioning the OA franchise’s decline. In September 2025, the FDA approved an expanded indication for Simparica Trio, enabling it to prevent flea tapeworm infections in dogs, a development that strengthened its competitive positioning. Additionally, Zoetis secured European Commission approvals for Lenivia (for dogs) and Portela (for cats), three-month anti-NGF monoclonal antibody therapies designed to complement monthly Librela and Solensia. These long-acting options aim to improve adherence and broaden treatment adoption in an underdiagnosed OA population. However, the market has yet to fully price in these innovations, as investors remain cautious about regulatory risks and near-term sales challenges.

Analyst Outlook and Valuation Divergence

Analyst sentiment toward Zoetis remains mixed, with some maintaining bullish outlooks despite the current downturn. BTIG reiterated a Buy rating with a $160 price target following Zoetis’s Innovation Day webcast in November 2025, highlighting a pipeline targeting $5 billion in new therapeutic areas (chronic kidney disease, oncology, cardiology). However, shares closed 2% lower during the event, reflecting investor disappointment over the lack of near-term revenue guidance for pipeline initiatives. Meanwhile, Stifel and KeyBanc trimmed their price targets, citing concerns about 2026 gross margin projections and competitive pressures in parasiticides and dermatology. The stock’s current valuation, with a $128.18 closing price, is widely seen as undervalued relative to a $170 fair value estimate, though this hinges on assumptions about long-term earnings growth and market share gains in new therapeutic areas.

Industry Context and Competitive Pressures

Zoetis operates in a highly competitive animal health sector, where product differentiation and regulatory compliance are critical. While its parasiticides and dermatology segments have shown resilience, the OA franchise’s struggles highlight vulnerabilities in monoclonal antibody therapies. Competitors are increasingly entering the OA space, intensifying pricing pressures and complicating Zoetis’s ability to maintain market share. Additionally, broader industry trends—such as declining veterinary clinic visits and economic constraints on pet owners—have exacerbated sales challenges. The company’s ability to balance innovation (e.g., Lenivia, Portela) with cost management and regulatory alignment will be pivotal in determining whether the stock can reverse its YTD trajectory in 2026.

Conclusion

Zoetis’s stock performance in 2025 has been defined by a confluence of safety-related setbacks, regulatory scrutiny, and competitive pressures. While the company has taken steps to mitigate OA-related risks through label updates and new product approvals, these measures have yet to translate into meaningful share price recovery. The path to a potential rebound hinges on the success of its long-acting OA therapies, the resilience of its parasiticides and dermatology portfolios, and its ability to navigate an increasingly complex regulatory landscape. For now, investors remain divided, with some viewing the stock as undervalued and others wary of near-term headwinds.