Valued at a market cap of $75.8 billion, Zoetis Inc. (ZTS) discovers, develops, manufactures, and commercializes animal health medicines, vaccines, diagnostic products and services, biodevices, genetic tests, and precision animal health products. The Parsippany, New Jersey-based company serves both livestock, including cattle, swine, poultry, fish, and sheep, as well as companion animals, such as dogs, cats, and horses.

Companies valued at $10 billion or more are typically classified as “large-cap stocks,” and Zoetis fits the label perfectly, with its market cap exceeding this threshold, underscoring its size, influence, and dominance within the drug manufacturers - specialty & generic industry. The company stands out as one of the world’s largest animal health companies, with unmatched scale, brand recognition, and product diversity. Its strengths lie in its deep R&D capabilities, allowing it to consistently innovate across therapeutics, vaccines, diagnostics, and genetic testing for both livestock and companion animals. The company benefits from a broad global presence, a diversified portfolio across species and geographies, and strong relationships with veterinarians, farmers, and pet owners.

This animal health giant has dipped 15% from its 52-week high of $200.33, reached on Sep. 19, 2024. Moreover, ZTS has declined marginally over the past three months, lagging behind the broader S&P 500 Index’s ($SPX) 2.1% rise during the same time frame.

Moreover, in the longer term, ZTS has fallen 1.2% over the past 52 weeks, underperforming SPX’s 13% uptick over the same time frame. However, on a YTD basis, shares of ZTS are up 4.5%, outpacing SPX’s 1.5% return. 

To confirm its bearish trend, ZTS has been trading below its 200-day moving average since early November, 2024, with slight fluctuations. However, it has remained above its 50-day moving average since  early May, with minor fluctuations. 

On May 6, ZTS’ shares closed down 5.2% after its Q1 earnings release despite delivering a better-than-expected performance. Its revenue came in at $2.2 billion, marking a 1.4% year-over-year increase and beating consensus estimates by a similar margin. Moreover, its adjusted EPS of $1.48 grew 7.2% from the year-ago quarter and topped Wall Street expectations by 5.7%. Higher companion animal segment sales and lower cost of sales acted as tailwinds, which also helped offset a 10.4% decline in revenue from the livestock segment.

Additionally, Zoetis raised its fiscal 2025 guidance, taking into account the effects of foreign exchange fluctuations and enacted tariffs. The company now expects revenue to be between $9.4 billion and $9.6 billion, and projects adjusted EPS in the range of $6.20 to $6.30. While the stock dropped on the day of the earnings announcement, it rebounded by 4.1% in the following trading session.

ZTS has outperformed its rival, Elanco Animal Health Incorporated’s (ELAN) 24.1% decline over the past 52 weeks. However, ZTS has lagged behind ELAN’s 11.2% uptick on a YTD basis. 

Despite ZTS’ recent underperformance, analysts remain highly optimistic about its prospects. The stock has a consensus rating of “Strong Buy” from the 16 analysts covering it, and the mean price target of $202.33 suggests an 18.8% premium to its current price levels.