Zoetis Inc. (ZTS) PT Lowered to $195 at Stifel

Stifel analyst Jonathan Block lowered the price target on Zoetis Inc. (NYSE: ZTS) to $195.00 (from $215.00) while maintaining a Buy rating.

The analyst commented: 'Our 10-K analysis highlights 2023 revenue growth that was more evenly distributed across Zoetis’ product portfolio relative to 2022. We believe the stock’s outperformance in 2023 was partially attributable to this diversified growth as it alleviated fears of new offerings (NexGard PLUS) infiltrating Zoetis’ key franchises (Trio growth decelerated from +57% to +9%). Additionally, in 2023, the stock benefited from the impending U.S. launch of Librela. However, in 2024, the stock has struggled as key franchises (notably Apoquel) will likely face increasing competition, and the slope of Librela’s ramp has been questioned due to perceived safety concerns. Our analysis shows how Librela has to drive revenue growth in 2024/2025--and our 2025 top-line estimate is modestly below consensus. This underscores Librela’s importance over the next 12-24 months. Finally, to change current investor sentiment, we point to 1Q24 operational revenue growth exceeding +9% and upbeat language from management around 2Q24 Librela expectations.'

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