ZTS Stock Earnings Review: Why Did Top Pet Stock Zoetis Crash?

As the world’s leading animal health company, Zoetis [ZTS] offers investors an interesting angle on the biotech theme.

Spun out of Pfizer [PFE] in 2013, the firm develops and markets vaccines, medicines and diagnostic and genetic tests for pets and farm animals, giving it exposure to both consumer and agricultural markets. Its products span everything from parasite prevention to pet dermatology. 

Recent quarters have seen steady growth in companion animal revenue, driven by rising pet ownership and premiumization trends, offsetting weaker livestock demand.

The company has also been investing heavily in biologics and digital health solutions to sustain its edge.

Zoetis reported its Q3 results on November 4. Let’s dive in. 

Q3 Earnings: Overview

The firm reported Q3 2025 revenue of $2.4bn, up 1% year-over-year, or 4% on an organic operational basis. This was slightly below the Zacks Consensus Estimate of $2.41bn, a miss of 0.35%. However, earnings beat expectations — EPS of $1.70 topped the consensus forecast of $1.62, delivering a positive surprise of 4.9%.

Net income rose 6% to $721m, translating to $1.63 per diluted share, up 9%. 

Adjusted net income reached $754m, or $1.70 per share, up 5% and 8%, respectively, on a reported basis, and 9% and 12% on an organic operational basis. 

The adjusted figures exclude $33m in purchase accounting adjustments, acquisition and divestiture costs and other significant items. 

“While growth moderated in Q3 in line with our expectations, we achieved significant regulatory milestones, including major new product approvals, geographic expansions and differentiating lifecycle innovations across products and species,” said CEO Kristin Peck.

US vs International Revenue

Zoetis divides its business into two segments: the US and everywhere else.

US revenue was up $1.3bn, down 2% year-over-year on a reported basis but up 3% organically. 

Companion animal sales were flat, as gains in parasiticides, diagnostics and dermatology treatments were offset by weaker demand for osteoarthritis monoclonal antibody products Librela and Solensia. 

Livestock revenue fell 9% due to the divestiture of the medicated feed additive portfolio, though organic sales rose 14%, led by cattle products and improved vaccine supply.

International revenue grew 3% to $1.1bn, or 6% organically. Companion animal sales rose 8%, driven by continued demand for parasiticides and dermatology treatments. Livestock sales declined 2% on a reported basis but gained 8% organically, supported by broad-based growth across species.

Lackluster Outlook

The company cut its 2025 sales forecast, citing “broader macro trends and operational environment.”

The company now expects revenue of $9.4bn–9.475bn, implying 5.5–6.5% organic growth, down from its previous forecast of $9.45bn–9.6bn.

“The reality is, regardless of what growth deceleration is attributed to, this level of growth will raise fears over competition and its impact on growth,” wrote William Blair analyst Brandon Vazquez in a report seen by Investor’s Business Daily. “More specifically, with the Street currently at about 7% companion animal growth in 2026, investors will ask how the business will accelerate from low-single-digit growth to high-single-digit growth in the face of growing competition in 2026.”

Investors seemed to share Vazquez’ trepidation.

ZTS stock plunged on the earnings, and is down 22.59% in the year to November 4, its lowest point in the last five years.

Best in Show: ZTS vs IDXX vs ELAN

Now let’s look at how Zoetis compares to two peers in the space.

IDEXX Laboratories [IDXX] positions itself as a diagnostics and software platform provider serving veterinarians. It is focused on the next wave of pet care innovation and recurring diagnostic instruments revenue. The company has been expanding its digital solutions and preventive care offerings, aiming to lock in recurring revenue streams and deepen relationships with veterinary clinics globally. IDEXX announced Q3 earnings on November 3, with revenue up some 13% to $1.11bn and adjusted EPS of $3.22, beating expectations. The company’s companion‑animal diagnostics business grew by around 12%, and livestock, poultry and dairy revenue by around 14%. 

Elanco Animal Health Incorporated [ELAN] is driving a turnaround, shifting from legacy exposure toward higher‑growth pet health and rationalizing its portfolio. The company is also investing in pipeline expansion and strategic acquisitions to strengthen its position in high-margin companion-animal markets, aiming to compete more directly with Zoetis on scale and innovation. It emphasizes growth via its companion animal product innovations and structural improvement in its farm animal business. Elanco reported Q3 results on November 5: revenue rose 10% year‑over‑year to $1.14bn, with adjusted EPS of $0.19 beating consensus by $0.14. 

Source: Yahoo Finance

Zoetis is the largest of the three, with scale across companion animals and livestock, but faces headwinds. In contrast, IDEXX is riding strong execution and product innovation in diagnostics with double‑digit quarterly growth, offering a clearer growth trajectory. Elanco trades at a valuation discount with an improving pipeline but carries more risk given its restructuring and smaller scale. For investors, Zoetis offers a broad platform but near‑term growth concerns; IDEXX offers higher growth tilt; Elanco offers value and recovery potential.

ZTS Stock: The Investment Case

The Bull Case for Zoetis

In short, Zoetis benefits from scale and diversification, serving both companion animals and livestock across global markets. Its broad product portfolio, including high-margin vaccines and therapies, underpins recurring revenue and pricing power. The company’s global R&D investment and strategic acquisitions expand its pipeline, positioning it to capture growth in emerging markets and premium pet care. Operational efficiency and strong cash flow support shareholder returns via dividends and buybacks. Despite macro pressure, Zoetis’ entrenched brand, veterinary relationships and ongoing product innovation create a durable growth platform for investors seeking stability in animal health.

The Bear Case for Zoetis

Zoetis faces headwinds from macroeconomic pressures, slowing consumer spending on pet care and livestock market volatility. Recent guidance cuts highlight sensitivity to operational challenges and soft demand in the US companion-animal segment. Key product lines underperformed expectations, raising execution risk. Increased competition in vaccines and diagnostics from IDEXX and Elanco threatens market share, while regulatory scrutiny and pricing pressures could compress margins. Rising input costs and foreign exchange fluctuations further challenge profitability. For investors, near-term growth visibility is limited, making Zoetis vulnerable to market volatility and earnings disappointments.

Conclusion

Zoetis combines scale and innovation, potentially supporting durable long-term growth. However, near-term macro pressures, competitive headwinds and recent guidance cuts warrant caution for investors seeking immediate upside.

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