📚 Earnings – Q3 2026
• 🔴 Revenue: $2,391 million, a decrease of 1% year-over-year, both on a reported and organic operating basis.
• 🔴 Net income: $591 million, a -18% year-over-year. Diluted EPS came in at $1.44, compared to $1.63 in the same quarter of 2025 (-12%).
• 🟡 Adjusted net income: $720 million, a decrease of 5% on a reported basis and 7% on an organic operating basis.
• 🟢 Adjusted EPS: $1.75, a +3% on a reported basis and +1% on an organic operating basis. Adjusted earnings per share outperformed net income, although underlying growth remains modest.
• 🔴 United States: Revenue of $1,246 M, down 6%. The companion animal business declined by 8%, impacted by consumer price sensitivity, competition in dermatology, and generics.
• 🟢 International: Revenue of $1,116 M, a growth of 4%. The livestock business stood out in particular, with 9% organic operating growth.
• 🟢 Livestock: Total revenue of $797 million, a +7% reported. Notable gains were seen in fish (+18% organic operating growth), cattle (+5%), and poultry (+3%).
• 🔴 Companion Animals: Revenue of $1,565 M, a decline of 5%. The weakness is particularly concentrated in the United States, where revenue fell by 8%.
📌 Key Points
• 🔴 The main problem continues to be the companion animalbusiness, which accounts for a significant portion of Zoetis’s operations. Competitive pressure in dermatology, the entry of generic drugs, and increased price sensitivity are affecting sales, especially in the United States.
• 🟢 The livestock is partially offsetting this weakness. Growth remains solid in both the United States and international markets, with gains across several animal categories.
• 🟡 International performance is stronger than that in the United States. However, growth is not uniform: some European markets and Japan posted declines during the quarter.
• 🟢 The company continues to expand its product portfolio. Notable developments include the approval of Convenia RTU for dogs in the United States, the launch of Lenivia in the United Kingdom, and new authorizations for products intended for companion animals and livestock.
• 🟢 Zoetis also received an emergency use authorization in the United States for Simparica Trio to treat New World heartworm infestations in dogs and puppies.
• 🟡 Innovation and product portfolio diversification remain strategic strengths, but they have yet to translate into a more visible recovery in pet sales.
• 🔴 Adjusted net income fell 7% on an organic operating basis. In addition, GAAP results were impacted by significant items, including asset impairments and restructuring costs. Therefore, it is important to distinguish between reported and adjusted earnings when analyzing business performance.
📊 Outlook for 2026
• 🟡 Revenue: projected to be between $9,220 million and $9,320 million. The company has narrowed the range and raised the lower end, although it still anticipates an organic operating contraction of 2% to 1%.
• 🟢 Adjusted net income: projected at between $2,600 million and $2,640 million, compared to the previous range of $2,570 million to $2,620 million.
• 🟢 Adjusted EPS: forecast raised to between $6.25 and $6.35, compared to the previous range of $6.15–$6.25.
• 🟡 Organic operating adjusted earnings growth: a decline of between 7% and 5% is expected, an improvement over the previous range, which projected a decline of between 9% and 5%.
• 🟡 Reported EPS: forecast of $5.50 to $5.60, slightly lower than the previous range of $5.55–$5.65.
• 🟢 R&D: The company is lowering its forecast for adjusted research and development spending to $705–715 million, down from the previous $720–730 million. This reduction contributes to the improved earnings estimates.
💬 Management Comments
CEO Kristin Peck noted that third-quarter results were in line with expectations. She acknowledged continued pressure in the companion animal business, partially offset by growth in livestock and diagnostics.
Management remains committed to innovation and a diversified product portfolio, highlighting Zoetis’s ability to continue developing animal health solutions. It also expects to complete the planned product approvals in 2026, with some milestones initially expected in 2027 now brought forward to the fourth quarter of 2026.
Assessment:
A mixed quarter. The decline in revenue and, in particular, the weakness in the companion animal business remain the main negative factors. However, the strength of the livestock segment, progress in innovation, and the improvement in adjusted EPS forecasts offer positive signs. The key fundamental to watch is whether Zoetis can stabilize sales of companion animal medications and regain organic growth. The quality of its portfolio and its position in animal health remain strengths, but a recovery in the core business will be critical to supporting a sustained improvement in earnings.