Zoetis Inc. (ZTS): A Bull Case Theory

We came across a bullish thesis on Zoetis Inc. on Bob’s Payment Stock Substack by Bob Hammel. In this article, we will summarize the bulls’ thesis on ZTS. Zoetis Inc.'s share was trading at $151.81 as of August 4^th. ZTS’s trailing and forward P/E were 27.25 and 24.57, respectively according to Yahoo Finance.

Zoetis remains a dominant player in the animal health industry, with leadership positions in parasiticides, dermatology, and pain management. In 2024, its flagship products Simparica, Apoquel, and Cytopoint generated one-third of revenue and grew 22%. Competitive pressure is rising with new launches from Elanco and Merck in parasiticides and dermatology, but the impact should be moderate and temporary given Zoetis’ strong brand equity, first-mover advantage, and loyal customer base.

Moreover, increased competition could expand category awareness, accelerating growth. The long-term opportunity in parasiticides and dermatology remains significant, with only one-third of U.S. dogs currently treated for fleas, ticks, and heartworm, and Zoetis expects the triple combination parasiticide market to more than double to $4.5 billion by 2028. Similarly, while 12 million dogs use Zoetis dermatology products, another 20 million remain untreated, and compliance among treated pets is low, leaving substantial room for penetration.

Beyond these core areas, Zoetis is targeting large unmet needs in pain management, chronic kidney disease, and oncology. Its monoclonal antibody for osteoarthritis, Librela, delivered $581 million in 2024 sales and could exceed $1 billion at peak. Upcoming launches in chronic kidney disease and oncology could unlock markets worth $3 billion and $2 billion annually, respectively. The animal health industry offers favorable dynamics, including resilient demand, strong pricing power, and limited generic competition. Zoetis trades at 23.4x NTM EPS, below historical averages, with a fair value estimate of $170, implying multiple expansion. With strong R&D, a robust pipeline, and significant untapped demand, Zoetis offers compelling upside despite near-term competitive noise.

Previously, we covered a bullish thesis on Zoetis Inc. (ZTS) by Best Anchor Stocks in May 2025, which focused on Librela adoption challenges but highlighted strong core franchises and pipeline strength. The stock has depreciated about 6% since then due to slower Librela uptake. The thesis still stands given Zoetis’ leadership and market tailwinds. Bob Hammel shares a similar view but stresses untapped market potential and new category opportunities.

Zoetis Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 74 hedge fund portfolios held ZTS at the end of the first quarter which was 76 in the previous quarter. 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.

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Disclosure: None.