Zoetis Inc (NYSE:ZTS) Stock Plummets Over 11% on Q3 Revenue Miss and Lowered 2025 Guidance

Zoetis Inc (NYSE:ZTS) reported financial results for the third quarter of 2025 that presented a mixed picture for investors, leading to a significant negative reaction in pre-market trading.

Earnings and Revenue Versus Estimates

The animal health company's performance against analyst expectations was the primary focus following the report. While the bottom-line figure showed strength, the top-line revenue and forward-looking guidance appeared to disappoint the market.

• Revenue: $2.4 billion, a 1% reported increase year-over-year but falling short of the analyst consensus estimate of approximately $2.43 billion.
• Adjusted Earnings Per Share (EPS): $1.70, which surpassed the analyst estimate of $1.64 per share.
• Full-Year 2025 Guidance: The company updated its revenue outlook to a range of $9.400 billion to $9.475 billion. The midpoint of this guidance, $9.44 billion, came in below the analyst sales estimate of $9.61 billion for the full year.

The market's reaction was swift and severe, with the stock dropping over 11% in pre-market activity. This suggests that investors were more concerned with the revenue miss and the lowered sales guidance for the year than they were encouraged by the earnings beat.

Operational Performance and Business Segments

On an organic operational basis, which excludes the impact of foreign exchange and certain acquisitions and divestitures, Zoetis delivered more robust growth. Revenue grew 4% in the quarter, and adjusted net income saw a 9% increase on the same basis.

The company's performance was segmented as follows:

• U.S. Segment: Reported revenue of $1.3 billion, a 2% decrease on a reported basis but a 3% increase operationally. Companion animal product sales were flat, with growth in parasiticides and dermatology products offsetting a decline in monoclonal antibody products for osteoarthritis pain in dogs and cats. Livestock product sales declined 9% on a reported basis, largely due to a divestiture, but increased 14% on an organic operational basis.
• International Segment: Reported revenue of $1.1 billion, a 3% increase on a reported basis and a 6% increase operationally. Companion animal product sales grew 8% on a reported basis, driven by parasiticides and dermatology products. Livestock product sales declined 2% on a reported basis but increased 8% on an organic operational basis.

Strategic Developments and Product Pipeline

The earnings release highlighted several regulatory milestones and product expansions that underscore the company's ongoing investment in its pipeline. Key developments included:

• Approval in Canada and a positive opinion in the EU for Lenivia, a long-acting monoclonal antibody for canine osteoarthritis pain.
• Marketing authorization in the EU for Portela, a similar treatment for cats.
• Label expansions for the Simparica Trio parasiticide in markets including Australia, Canada, and the UK.
• Geographic and label expansions for key dermatology products Apoquel and Cytopoint.
• The launch of the Vetscan Opticell hematology analyzer in the EU and a new conditional approval for Dectomax-CA1 Injectable for cattle in the U.S.

CEO Kristin Peck attributed the quarter's results to "the relentless focus and consistent execution of our colleagues across the world," and emphasized the company's robust pipeline and manufacturing excellence as positioning it for sustainable long-term growth.

Outlook and Market Sentiment

The downward revision to the full-year 2025 revenue guidance appears to be the central factor driving the negative investor sentiment. While the company's operational performance remains solid and its product pipeline is active, the market is currently penalizing the stock for its failure to meet sales expectations and for moderating its growth outlook for the remainder of the year.

For a detailed look at historical earnings, future estimates, and analyst projections for Zoetis Inc, you can review the data here.

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