Zoetis Inc. (NYSE:ZTS) reported third-quarter adjusted earnings of $1.75 per share, beating the consensus of $1.51.
The animal health company reported sales of $2.391 billion, beating the consensus of $2.304 billion. Revenue decreased 1% on a reported and organic operational basis.
U.S. Segment Breakdown: Companion Animal Vs. Livestock Performance
“Our third-quarter performance was in line with our expectations. Continued pressure in Companion Animal was partially offset by growth in Livestock and Diagnostics, reflecting the breadth of our portfolio,” Zoetis CEO Kristin Peck.
“We remain focused on defending our position and directing our resources where they can have the greatest impact,” Peck added.
Revenue in the U.S. segment was $1.2 billion, down 6% on both a reported and an organic operational basis. Companion animal revenue decreased 8%, reflecting macro-driven price sensitivity and competitive pressure in dermatology, as well as generic competition.
Livestock revenue increased 5%, supported by strength across cattle, swine and poultry.
Macro Headwinds, Vet Clinic Declines, and Generic Competition
Zoetis said U.S. clinic visits were down 3% year-to-date across categories, as high housing costs are reducing pet adoption, fewer dogs are joining households, and pet owners are making trade-offs in care due to cost pressures.
Third-quarter canine vet visits declined around 5%, with itch-related visits down approximately 3%, as well as broader affordability pressures on pet owner spending.
Volumes declined due to competition from generic Convenia and Cerenia, which moderated to the lowest level since those generics entered the market in the first quarter.
On an earnings call, CFO James Saccaro said, “Our diverse portfolio and disciplined commercial execution continue to help us navigate an operating environment shaped by competitive pressure in our key Companion Animal franchises, softer clinic visits, and ongoing affordability headwinds for pet owners.”
Updated Fiscal 2026 Guidance and Long-Term Strategy
Zoetis raised its fiscal 2026 adjusted EPS guidance from $6.15-$6.25 to $6.25-$6.35, compared with the consensus of $6.28.
The company also raised its 2026 sales guidance from $9.12 billion-$9.32 billion to $9.22 billion-$9.320 billion, compared with the Street estimate of $9.326 billion.
Saccaro said the company will plan prudently for 2027 and will not be assuming improvements in the macro environment or pet owner spending trends, and expects the competitive dynamics to remain throughout the year.
Zoetis said it is encouraged by the commercial strategies planned for 2027 and 2028. While limited contribution from these launches is expected in 2027, their impact should build later in the year and into 2028.
ZTS Price Action: Zoetis shares were down 6.10% to $83.76 on Thursday, according to Benzinga Pro data.
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