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Zoetis Inc. ZTS will report first-quarter 2023 results on May 4, before market open.
Zoetis’ earnings surprise history has been decent so far. The bottom-line surpassed estimates in one of the trailing four quarters, missed in two, and met in the other. The company delivered an average earnings surprise of 1.04% in the same time frame.
Shares of ZTS gained 19.9% in the year-to-date period against the industry’s 1.3% decline.
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Let's see how things might have shaped up in the soon-to-be-reported quarter.
Factors to Consider
The veterinary drugmaker derives most of its revenues from a diversified product portfolio of medicines and vaccines used to treat and protect livestock and companion animals. Zoetis’ remaining revenues are derived from its non-pharmaceutical product categories, such as nutritional and agribusiness, and products and services in biodevices, genetic tests and precision animal health.
The company reports business results under two geographical operating segments — the United States and International.
First-quarter revenues in the United States segment are likely to have increased from the previous quarter. The top-line estimate for this segment stands at $1.07 billion.
International revenues in the last reported quarter were flat on a reported basis but increased 12% year over year on an operational basis. This trend is expected to have continued in the to-be-reported quarter. The top-line estimate for this segment stands at $957 million.
Improved sales of Apoquel and Cytopoint brands must have boosted the dermatology portfolio in the first quarter. Zoetis’ CompanionAnimal business has also been performing well. This is primarily due to higher sales of Simparica Trio, a triple combination parasiticide for dogs, and the recent launches of its mAb therapies, Librela and Solensia. Such developments are likely to have driven growth in the to-be-reported quarter.
However, livestock product sales and sales of cattle products are expected to have declined year over year, much like the previous quarter.
Sales of poultry products in the United States segment declined in the last reported quarter. This was mostly due to the expanded use of lower-cost alternatives for premium products. However, the same increased in the International segment owing to market growth and demand generation efforts. The trend is likely to have continued in the to-be-reported quarter. Sales of swine products must have also declined year over year due to increased generic competition.