Zoetis (ZTS) Surges 4.93% on Earnings Beat and Guidance Hike – Is This a Catalyst for a New Bull Run?

Summary
• Zoetis (ZTS) surges 4.93% to $121.60, hitting a 52-week high of $122.13
• Q2 2025 EPS beats estimates by $0.14, revenue tops $2.46B vs. $2.41B expected
• Full-year 2025 EPS guidance raised to $6.30–$6.40, surpassing $6.231 consensus
• Sector leader Elanco (ELAN) gains 3.44% as veterinary drugs rally

Zoetis Inc. (ZTS) is surging on a rare confluence of earnings outperformance and upgraded guidance, with the stock trading near its 52-week high. The rally follows a Q2 beat driven by margin expansion and a strategic pivot in companion animal care. With the veterinary drugs sector gaining momentum, investors are weighing whether this is a breakout moment or a correction in a long-term bearish trend.

Earnings Beat and Guidance Hike Fuel Zoetis' Rally
Zoetis’ 4.93% intraday surge is directly tied to its Q2 2025 results, which saw earnings per share (EPS) of $1.76, exceeding consensus by $0.14, and revenue of $2.46 billion, surpassing expectations. The company raised full-year 2025 EPS guidance to $6.30–$6.40, well above the $6.231 consensus, while projecting $9.5–$9.6 billion in revenue. William Blair upgraded its FY2025 EPS estimate to $6.34, signaling confidence in Zoetis’ pipeline and core markets. Analysts highlight a 5.8% EPS beat in the latest quarter, reinforcing the stock’s market leadership in animal health. The rally reflects optimism about Zoetis’ ability to offset Librela sales declines with growth in its companion animal portfolio.

Veterinary Drugs Sector Gains Momentum as Elanco (ELAN) Rises 3.44%
The veterinary drugs sector is showing strength, with Elanco Animal Health (ELAN) rising 3.44% alongside Zoetis’ rally. Both companies are benefiting from increased demand for pet healthcare and regulatory tailwinds, such as the FDA’s recent emergency use authorization for lotilaner to treat New World screwworm in dogs. While Zoetis’ growth is driven by companion animal care and margin expansion, Elanco’s recent approval of Credelio Quattro—a broad-spectrum parasite protection—highlights sector-wide innovation. The sector’s resilience contrasts with broader market volatility, suggesting a shift in investor sentiment toward animal health as a defensive play.

Bullish Options and ETFs to Capitalize on Zoetis' Momentum
• 200-day average: 153.239 (below) • RSI: 7.27 (oversold) • MACD: -7.06 (bearish) • Bollinger Bands: 103.70–153.62 • Support/Resistance: 143.73–144.37 (30D), 146.26–147.43 (200D)

Zoetis is trading near its 52-week high of $122.13, with technical indicators showing a short-term bearish trend but strong intraday momentum. Key levels to watch include the 200-day moving average at $153.24 (far above current price) and the upper Bollinger Band at $153.62. The RSI at 7.27 suggests oversold conditions, while the MACD (-7.06) indicates bearish momentum. Aggressive bulls may consider ZTS20251219C120 and ZTS20251219C125 for leveraged exposure.

ZTS20251219C120 (Call, $120 strike, 12/19 expiration):
• IV: 30.41% (moderate) • Leverage: 38.83% • Delta: 0.595 • Theta: -0.124 • Gamma: 0.0369 • Turnover: 26,141
• Payoff at 5% upside ($127.68): $7.68/share • Why: High leverage and moderate delta position this call to benefit from a continuation of the rally while managing time decay (theta).

ZTS20251219C125 (Call, $125 strike, 12/19 expiration):
• IV: 26.31% (moderate) • Leverage: 50.80% • Delta: 0.392 • Theta: -0.095 • Gamma: 0.0424 • Turnover: 42,621
• Payoff at 5% upside ($127.68): $2.68/share • Why: Strong liquidity and high gamma make this contract ideal for capitalizing on price volatility if the stock breaks above $125.

Action: Aggressive bulls may consider ZTS20251219C125 into a breakout above $125, while ZTS20251219C120 offers leveraged exposure for a continuation of the rally.

Backtest Zoetis Stock Performance
Below is the interactive report. Please open the module to view the complete back-test dashboard.Key take-aways:• The strategy has under-performed since 2022, posting a total return of about −12 % (annualized −2.8 %), with a sizeable 24 % maximum drawdown and a negative Sharpe ratio (≈ −0.30). • Average trade lost −2.3 %, and only modest wins of ~5 % failed to offset average losses of ~7 %. • The simple “buy after 5 % intraday spike” rule did not capture sustainable momentum in Zoetis; most surges were short-lived reversals. • Tight risk controls (8 % stop, 10 % take-profit, 20-day max hold) limited tail risk but could not prevent overall drift lower in a declining stock. • Consider augmenting the trigger with additional filters (e.g., trend confirmation, volume surge, broader market regime) or testing alternative exit rules to improve expectancy.Feel free to explore the interactive charts and trade log in the dashboard for deeper insights.

Zoetis’ Rally Gains Legs – Watch for Breakout Above $125
Zoetis’ 4.93% surge is a rare positive anomaly in a long-term bearish trend, driven by earnings outperformance and upgraded guidance. While technical indicators like the RSI and MACD suggest caution, the stock’s proximity to its 52-week high and strong sector momentum warrant attention. Investors should monitor the $125 level as a critical breakout threshold, with options like ZTS20251219C125 offering leveraged exposure. The veterinary drugs sector, led by Elanco’s 3.44% gain, is showing resilience, suggesting a potential shift in risk appetite. Act now: Position for a continuation of the rally with ZTS20251219C125 or ZTS20251219C120 if the stock breaks above $125.