Here's Wedgewood Partners' Investment Thesis for Zoetis (ZTS)

Wedgewood Partners, an investment management company, released its second-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the second quarter, Wedgewood Composite’s net return was 7.1% compared to the Standard & Poor’s 10.9%, the Russell 1000 Growth Index’s 17.8%, and the Russell 1000 Value Index’s 3.8% return for the same period. In addition, you can check the fund’s best 5 holdings to know its best picks in 2025.

In its second quarter 2025 investor letter, Wedgewood Partners highlighted stocks such as Zoetis Inc. (NYSE:ZTS). Zoetis Inc. (NYSE: ZTS) is involved in the research, development, manufacturing, and sale of animal health medications, vaccines, and diagnostic products and services. The one-month return of Zoetis Inc. (NYSE:ZTS) was -5.55%, and its shares lost 17.79% of their value over the last 52 weeks. On July 18, 2025, Zoetis Inc. (NYSE:ZTS) stock closed at $148.60 per share, with a market capitalization of $66.158 billion.

Wedgewood Partners stated the following regarding Zoetis Inc. (NYSE:ZTS) in its second quarter 2025 investor letter:

"We recently initiated a position in Zoetis Inc. (NYSE:ZTS), the global leader in animal healthcare. The Company provides a range of products from medicines and vaccines to diagnostic testing, plus a variety of related products and services for pets and livestock in over 100 countries. In the U.S., where the Company generates roughly 55% of its revenue, its business skews heavily toward pets. In the rest of the world, the Company’s business skews more heavily toward livestock, particularly in developing markets. Globally, the split between animal types falls roughly 70% pet and 30% livestock.

Like most of its largest animal healthcare competitors, Zoetis was spun out of a large human pharmaceutical company (Pizer) which historically has handled a significant portion of the heavy lifting behind scientific breakthroughs. Pizer created many of these products for human use, and Pizer holds and defends many of the patents licensed to Zoetis. While Zoetis still trumpets its research and development investments, the business, has historically pursued generally lower risk/higher reward R&D, such as extending an existing product to a new animal species or making an alteration to an existing product to target a new indication…” (Click here to read the full text)

Zoetis Inc. (NYSE:ZTS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 74 hedge fund portfolios held Zoetis Inc. (NYSE:ZTS) at the end of the first quarter, compared to 76 in the previous quarter. In the first quarter of 2025, Zoetis Inc. (NYSE:ZTS) posted $2.2 billion in revenue, growing 1% on a reported basis and 9% on an organic operational basis. While we acknowledge the potential of ZTS as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Zoetis Inc. (NYSE:ZTS) and shared the list of best dividend stocks in the pharma sector. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.