Key Takeaways
- Six funds, Fundsmith among them, cut their Zoetis (ZTS) stakes in the quarter ended June 30, and two sold every share.
- It also trades below other big specialty drugmakers. Takeda Pharmaceutical (TAK), United Therapeutics (UTHR) and Haleon (HLN).
- Zoetis has cut its 2026 earnings guidance twice this year, and analysts now expect its earnings to dip this year.
- At about 13.5x forward earnings, Zoetis trades at less than half its five-year average and below Takeda, Haleon and United Therapeutics.
- Following the funds out now looks late, but a third guidance cut when Zoetis reports on Nov. 5 would change that.
Zoetis reports Q3 results on Thursday, Nov. 5, and six funds have already headed for the exit.
Their latest 13Fs, for the quarter ended June 30 and filed between July 24 and Aug. 14, show all six cutting their stakes.
Fundsmith and Veritas are out
Terry Smith’s Fundsmith held 3.88 million Zoetis shares worth $458 million at March 31, 3.6% of its portfolio. By June 30, it held none.
Veritas Asset Management sold out too: it had 1.25 million shares at March 31, worth $148 million and 2.5% of its fund.
Comgest Global Investors nearly sold out as well, with 2,996 shares left at June 30. The other three cut back hard:
- Polen Capital cut its stake 92%, to 320,420 shares worth $23 million (0.2% of its 13F stocks).
- Unisphere Establishment cut 46%, to 1.50 million shares worth $108 million (0.9%).
- Dundas Partners cut 45%, to 163,462 shares worth $12 million (0.8%).
A 13F doesn’t say when in the quarter a fund sold, or why.
Zoetis stock is down 30% from its March 31 price, and up 17% from where it ended June.
TIKR tracks 16 analysts on Zoetis. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Zoetis, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Zoetis’ Analyst Ratings
Two guidance cuts in three months
Zoetis made its first guidance cut of the year in the June quarter.
But on May 7, Zoetis lowered its 2026 adjusted EPS guidance to $6.85-$7.00, from $7.00-$7.10, and the stock fell 22% that day. Management pointed to softer US demand: fewer vet visits, and pet owners more careful about price.
Then on Aug. 6, after the quarter ended, Zoetis cut again, to $6.15-$6.25 a share. It also now guides for organic operational revenue to fall 1% to 3% this year.
Analysts have followed it down. They now expect normalized EPS of $6.26 in 2026, against $6.41 in 2025, then $6.41 again in 2027 and $6.87 in 2028:
That $6.26 sits inside management’s range, so for now analysts are taking the guidance at its word.
Cheap against its own history
Zoetis trades at 13x forward earnings. That’s less than half its five-year average of 28x and far below its peak of 50x in December 2021.
It also trades below other big specialty drugmakers.
- Takeda Pharmaceutical gets about 19x forward earnings, and
- United Therapeutics about 20x. Takeda and United Therapeutics are both within 2% of their 52-week highs, while Zoetis is 43% below its own.
- Haleon is closer at about 15x. Haleon is 24% off its high after it sank 14% on a growth downgrade.
Analysts have cut their targets just as hard. The 16 analysts’ average target for Zoetis fell from $188 a year ago to $88, its lowest of the year:
That’s still 6% above the last close of $83, though the lowest target, $74, sits below it.
Don’t follow them out now
The risk is a third cut on Nov. 5. If US pet demand keeps slipping, analysts would likely cut their 2027 estimates too, and 13x wouldn’t look cheap anymore.
The way I see it, selling now means selling after a 43% fall, at one of the lowest multiples Zoetis has had in five years.
And today’s estimates already assume two years without growth. I’d hold, and I’d be a buyer if the guidance holds when Zoetis reports.
After that, the September-quarter 13Fs, due by Nov. 16, will show whether Polen, Unisphere and Dundas kept selling into the drop.
So what is Zoetis stock actually worth?
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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 of the stocks mentioned. Thank you for reading, and happy investing!
