Hello everyone,
Today I would like to introduce you to a share that has completely disappeared from the radar of many investors - and that is precisely what makes it interesting: **$ZTS (+0,32%) (NYSE: ZTS)**, the world's largest animal health company.
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What is Zoetis anyway?
For those who don't know the name: Zoetis was spun off from Pfizer in 2013 and is now the undisputed market leader for veterinary medicines worldwide. The portfolio includes vaccines, antiparasitics, dermatology products and diagnostics - both for pets (dogs, cats) and farm animals (cattle, pigs, poultry). Well-known products: **Simparica Trio** (tick protection), **Apoquel** and **Cytopoint** (allergy/dermatology), **Librela** (pain therapy for dogs).
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## Why is the price down?
The share price has more than halved in recent months - from ~172 USD to the current ~74 USD. This is not a small setback, this is a real price bloodbath. What has happened?
**Q1 2026 was a shock:**
- Sales +3% to USD 2.3 bn - but virtually zero organic growth
- Without a one-off effect of USD 100m in foreign business, organic sales would even have fallen by ~5%
- Adjusted EPS: USD 1.53 vs. expected USD 1.60 - missed expectations
- Adjusted operating margin: 33.5% - that is 6.4 percentage points less than in the previous year
- US pet business: **-11%** - the core of the problem
- CEO Kristin Peck lowered the annual targets: Sales now only USD 9.68-9.96 billion, EPS USD 6.85-7.00
In addition, there are legal disputes surrounding the painkiller **Librela** (safety concerns, plaintiffs accuse Zoetis of concealing risks) and competitive pressure from generics in key categories.
The market reacted brutally: **-21.5% in a single day on May 7, 2026**, -30% in the last month, -54% from 52-week high.
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## Why I still think this is a buying opportunity
And this is where it gets interesting. Because if you look at the fundamentals, the fall in the share price does not match the actual quality of the company.
**1. profit margin of 27.8%**
That shows: Zoetis is not a growth hype, but a genuine, highly profitable company. Even in a weak quarter.
**2. strong growth in international business**
While the US segment is weakening, the international business grew by **+17% to USD 1.1 billion** - driven by livestock products and antiparasitics. This shows that the business model is working and the problem is geographically limited.
**3rd EPS growth of ~13% expected**
Despite everything, analysts expect earnings per share of ~ USD 7.09 for 2026 - that is 13% more than in 2025. At a share price of USD 74, this results in a **CGV of around 10** - historically favorable for a quality stock in this class.
**4. RSI of 15 - extreme oversold territory**
Technically speaking, an RSI of 15 is exceptionally rare. This does not automatically mean a trend reversal, but it does signal that the selling pressure is approaching exhaustion. With solid fundamentals at the same time, this is a rare setup.
**5th analyst price target: USD 195**
The average price target of 22 analysts is USD 195 - compared to the current price of ~ USD 74. Even if the analysts are 50% too optimistic, there would still be considerable upside. Structurally, Zoetis is not an ailing company, but a market leader in a growth market (humanization of pets, increasing veterinary visits worldwide, growing middle class in emerging countries with farm animals).
**6th dividend remains**
Despite everything, the Board of Directors has confirmed a quarterly dividend of **0.53 USD per share** for Q3 2026. Management believes in the stability of the company.
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## The setup in short form
Current price: ~74 USD
52-week high: 172 USD
Price loss since high: -54%
RSI: ~15 (extremely oversold)
P/E ratio 2026e: ~10
Profit margin: 27.8%
EPS growth 2026e: +13%
Analyst price target Ø: USD 195
Dividend/quarter: USD 0.53
Dividend yield: ~2.6%
Dividend growth: increased 12 years in a row
## My assessment
Zoetis is not a turnaround case in the classic sense. The business model is intact, the moat (market leadership, customer loyalty among veterinarians, R&D pipeline) is in place. What is missing is short-term confidence - and that creates opportunities for patient investors.
If you are willing to bring a 12-18 month time horizon and bet on a normalization of the US pet business, you will get a global market leader at a fraction of its historical value.
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## ⚠️ An objection - which you should take seriously
I'll be honest: **This is not a risk-free bet.
The Q1 slump in the US pet business (-11%) is not a one-off effect - it reflects a structural shift. Pet owners are price sensitive, generics are eating into market share and competition in dermatology and parasitics is increasing. Added to this is the Librela lawsuit, the outcome of which is uncertain. Argus has just downgraded the share from "buy" to "hold" - these are not bullish signals from Wall Street.
The crucial question that Q2/Q3 must answer: Is the US pet business cyclically weak (i.e. recovery possible) - or is an era of high premium margins permanently breaking away? Until this is answered, there remains a certain risk that the share price will continue to move sideways despite the RSI 15 or test it again.
What do you think?
