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QS Research · Michael Burry's Scion Capital analyst template · 2006

Zoetis Inc. (ZTS)

As of 2026-11-02 · 12/15 boxes filled from SEC filings and market data

Conclusion: PASS

Conviction low · base case 0% · downside -22% · upside +23%

Applying Zoetis's current TTM multiples is tautological but shows no mispricing: at 11.2x EV/EBITDA on TTM EBITDA of $3.69B, EV equals $41.33B, less net debt $7.37B gives exactly today's $82.18 (base = 0%). A downside case using PAHC's 9.2x EV/EBITDA yields $64.32/share (-21.7%), and an upside case using PAHC's 15.8x P/E on TTM net income $2.64B yields $100.94 (+22.8%). Neither a long (base +30%, downside ≥ -25%) nor a short (base -30%, upside ≤ +25%) is triggered, and the risk/reward is roughly balanced. The stock is not yet cheap enough given declining U.S. companion animal revenue and rising debt.

Key numbers

The 15 boxes

  1. ✓ 1. Long-form business notes

    Zoetis Inc. is a global animal health company with two reportable segments, U.S. and International, selling companion animal (~70% of FY2025 revenue) and livestock (~29%) products across parasiticides, vaccines, dermatology, anti-infectives, pain/sedation, other pharmaceutical and diagnostics. Between FY2020 and FY2025, revenue grew from $6.67B to $9.47B and net income from $1.64B to $2.67B, while top-selling products Simparica/Simparica Trio and Apoquel/Apoquel Chewable contributed 16% and 12% of FY2025 revenue. The company was incorporated in Delaware in July 2012 as a former Pfizer unit and in FY2024 divested its medicated feed additive portfolio, removing that category.

  2. ✓ 2. Competitive advantage

    Zoetis has scale as the largest animal health company by revenue, supported by brand loyalty that often persists after exclusivity loss, a large IP portfolio, and direct veterinarian relationships. However, generic competition (Draxxin U.S. sales -66% since 2021) and named competitors (Boehringer Ingelheim, Merck Animal Health, Elanco, IDEXX) pressure the franchise. Absolute revenue and pre-tax income grew every year from FY2020 to FY2025, and net income stayed positive, but the sources provide no margin or return ratios.

  3. ✓ 3. 10-Q takeaways

    For Q2 2026, Zoetis revenue was $2,468 million, flat overall but down 2% operationally on key franchise volume declines; U.S. companion animal weakness was partly offset by International growth. Margins compressed modestly, and restructuring charges rose sharply year over year. The supplied 10-Q excerpts provide no inventory, cash, buyback or guidance figures and state no material changes to risk factors.

  4. ✓ 4. Corporate governance
  5. ✓ 5. Overview of the prior 3 years of 8-K filings
  6. ✓ 6. Other significant filings
  7. ✓ 7. Chronology of significant news and events
  8. ✓ 8. Comparables valuation interpretation
  9. ✓ 9. Insider trading interpretation
  10. ○ 10. Earnings-call notes
  11. ○ 11. Impression of the shareholder letter
  12. ○ 12. Scuttlebutt overview
  13. ✓ 13. Valuation and risk/reward summary
  14. ✓ 14. Current price suppression and potential catalysts

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