Key Takeaways:
- Zoetis is a global leader in animal health medicines, vaccines, diagnostics, and precision animal health solutions for livestock and companion animals.
- ZTS stock could reasonably reach $185 per share by December 2030, based on our valuation assumptions.
- This implies a total return of 45.7% from today’s price of $127, with an annualized return of 10.1% over the next 3.9 years.
Zoetis Inc. (ZTS) continues to benefit from rising pet spending, resilient livestock demand, and a broad portfolio of animal health products, even as the stock has pulled back from its 52‑week high of 177.40 dollars.
The company operates with best‑in‑class profitability, as shown by a last‑twelve‑month EBIT margin of 37.9% and ROIC of 27.8%, while maintaining modest leverage at 1.27 times net debt to EBITDA.
The animal health leader serves veterinarians, livestock producers, and pet owners worldwide through medicines, vaccines, diagnostics, and precision technologies across species, including cattle, swine, poultry, fish, sheep, dogs, cats, and horses.
Here’s why Zoetis stock could provide solid returns over the next few years as it leverages its leading animal health franchise and strong profitability profile.
What the Model Says for Zoetis Stock
We analyzed the upside potential for Zoetis stock using valuation assumptions based on its durable growth in animal health, attractive margins, and a reasonable earnings multiple compared with its historical averages.
Based on estimates of 4.1% annual revenue growth, 39.8% operating margins, and a normalized P/E multiple of 19.1x, the model projects Zoetis stock could rise from $127to $154 per share.
That would be a 21.9% total return, or a 10.9% annualized return over the next 1.9 years.
Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for Zoetis stock:
1. Revenue Growth: 4.1%
Zoetis generated a last 3‑year revenue CAGR of 6.0%, while analysts expect forward 2‑year revenue growth of around 3.5%, reflecting a maturing but still expanding animal health market. In the guided valuation, revenue growth is set at 4.1% through December 2027, which sits slightly above the near‑term consensus but below the company’s longer‑term history.
This assumption factors in continued demand for companion animal products, dermatology treatments, and parasiticides, which have supported steady top‑line expansion even during macroeconomic volatility.
Zoetis’ broad geographic presence and diversified species exposure help smooth cyclical swings, and its collaboration with Blacksmith Medicines on novel antibiotics highlights ongoing innovation in animal health.
Because of these dynamics, a mid‑single‑digit growth rate appears consistent with both past performance and consensus expectations embedded in the TIKR model.
2. Operating Margins: 39.8%
Zoetis already operates at very high profitability, with a last‑twelve‑month EBIT margin of 37.9% and gross margin of 71.7%, supported by patented therapies, strong brands, and scale in manufacturing and R&D.
Based on analysts’ consensus estimates, we assume an operating margins of 39.8% by 2027, modestly above the current level and in line with the company’s ability to leverage operating expenses as revenue expands.
This margin assumption reflects Zoetis’ premium product mix, including specialized companion animal treatments and diagnostics, which generally command attractive pricing and recurring demand.
It also considers that Zoetis continues to invest in innovation and commercial capabilities, but its high ROIC of 27.8% and ROE of 49.9% show that these investments have historically been disciplined and value accretive.
3. Exit P/E Multiple: 19.1x
Based on analysts’ consensus estimates, we use a 19.1x P/E multiple at the end of 2027, roughly in line with Zoetis’ current forward P/E of 19.09x and slightly below its last‑twelve‑month P/E of 21.34x.
This implies the market continues to value Zoetis as a high‑quality, stable compounder rather than assigning a significant premium for faster growth.
Zoetis’ dividend yield of 1.7% and payout ratio of 32.6% provide an additional source of shareholder return while leaving room for reinvestment and balance sheet flexibility, as net debt to EBITDA remains a manageable 1.27x.
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What Happens If Things Go Better or Worse?
Different scenarios for ZTS stock through 2029 show varied outcomes based on revenue growth, margin performance, and valuation multiples (these are estimates, not guaranteed returns):
- Low Case: Revenue growth and margins come in at the low end of expectations → 4.5% annual returns
- Mid Case: Zoetis executes in line with current estimates → 10.1% annual returns
- High Case: Stronger growth and resilient margins support a higher multiple → 15.2% annual returns
Even in the conservative case, Zoetis stock offers positive returns supported by its high margins, strong ROIC, and diversified animal health portfolio.
The mid‑case and high‑case outcomes, with annualized returns of around 10% and above 15%, suggest the stock could be particularly interesting if Zoetis sustains its profitability and demand remains healthy across companion animal and livestock segments.
See what analysts think about ZTS stock right now (Free with TIKR) >>>
How Much Upside Does Zoetis Stock Have From Here?
With TIKR’s new Valuation Model tool, you can estimate a stock’s potential share price in under a minute.
All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E Multiple
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
See a stock’s true value in under 60 seconds (Free with TIKR) >>>
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
