The 5 Most Interesting Analyst Questions From Zoetis's Q3 Earnings Call

Zoetis faced a challenging third quarter, with the market reacting negatively to results that showed flat year-on-year sales and a trim to full-year revenue guidance. Management attributed the muted performance primarily to subdued clinic visits in the U.S. companion animal segment and heightened promotional activity from competitors. CEO Kristin Peck noted, “Growth moderated this quarter driven by a strong year-over-year comp and macro factors, including vet clinic visits and promotional activity.” The company also pointed to social media-driven misperceptions affecting its osteoarthritis pain portfolio, especially Librela, and acknowledged that competitive launches in dermatology created additional headwinds.

Is now the time to buy ZTS? Find out in our full research report (it’s free for active Edge members).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Zoetis’s Q3 Earnings Call

• Erin Wilson Wright (Morgan Stanley) asked about intra-quarter changes and whether lower guidance reflected lasting competitive threats or temporary macro factors. CFO Wetteny Joseph replied that therapeutic visit declines were the key driver for reduced growth, but he does not view current trends as indicative of future years, citing stabilization efforts and expected recovery in OA pain products.
• Michael Ryskin (Bank of America) inquired about the abrupt shift in U.S. companion animal outlook, questioning why Zoetis was now more exposed to vet clinic headwinds. Joseph emphasized that therapeutic visits were down for three consecutive quarters, affecting both dermatology and pain portfolios, and noted strong alternative channel growth as a partial offset.
• Jonathan Block (Stifel) pressed for clarity on expectations for volume growth and the sustainability of pricing versus competitive pressure. Joseph reiterated that while volume was flat, price increases were in line with historical trends, and he expects volume to rebound as macro and competitive factors normalize.
• Brandon Vazquez (William Blair) questioned the Librela launch missteps and how lessons learned would be applied to new pain products. CEO Kristin Peck outlined plans for phased specialist engagement, enhanced education, and clinical research to ensure smoother adoption for Lenivia and Portela.
• Christopher Schott (JPMorgan) asked for specifics on dermatology franchise weakness and the timing of therapeutic visit recovery. Joseph clarified that competitive dynamics were largely as anticipated, but lower clinic visits had a direct impact, and he could not predict precisely when those trends would improve.

Catalysts in Upcoming Quarters

In the next few quarters, our team will closely monitor (1) evidence of stabilization and recovery in the Librela osteoarthritis pain franchise, (2) the effectiveness of management’s educational and research initiatives to offset social media-driven misperceptions, and (3) competitive dynamics in dermatology as new products continue to launch. Progress on the launch preparations and regulatory approvals for Lenivia and Portela will also serve as important indicators for Zoetis’ ability to reinvigorate its companion animal growth engine.

Zoetis currently trades at $120.21, down from $144.46 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).

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