Zoetis (ZTS) to Report Q2 Earnings: What's in the Cards?

Zoetis Inc. ZTS is scheduled to report second-quarter 2020 results on Aug 6, before market open.

The company flaunts an excellent earnings surprise history, surpassing expectations in the trailing four quarters by 6.97%, on average. In the last reported quarter, the company delivered anearningssurprise of 7.95%.

Shares of Zoetis have increased 14.6% in the year so far against the industry’s decline of 6.5%.

Let's see how things are shaping up for this announcement.

Factors to Consider

Zoetis derives majority of revenues from a diversified product portfolio of medicines and vaccines used to treat and protect livestock and companion animals. The company reports results under two geographical operating segments, namely the United States and International.

Solid sales from the dermatology portfolio strengthened the United States segment in the last reported quarter, a trend that most likely continued in the second quarter too. The company’s companion animal business has been performing well too.

Simparica franchises, including some initial stocking of Simparica Trio, the new triple combination parasiticide, continue to drive growth for the companion animal portfolio. Key dermatology products like Apoquel and Cytopoint steadily boosted sales in the last reported quarter, a trend that most likely continued in the second quarter as well.

However, sales of livestock products declined in the last reported quarter due to continued weakness across the beef and dairy cattle sectors.The trend might have persisted in the second quarter and negatively impacted sales.

The company expects a more significant impact from the COVID-19 pandemic for the full year as the lockdowns and recession continue to affect its business. Hence, the company lowered its 2020 guidance to reflect the current outlook for the full year. The company expects adjusted earnings of $3.17-$3.42 per share, down from the previous guidance of $3.90-$4.00. Revenues are projected between $5.950 billion and $6.250 billion, lower than the previous guidance range of $6.650-$6.800 billion.

Key Event to Note

In July 2020, Zoetis acquired the Fish Vet Group from Benchmark Holdings, PLC, as a strategic addition to its Pharmaq business, which develops and commercializes fish vaccines and offers services in vaccination and diagnostics for aquaculture. The addition of Fish Vet Group will expand the company’s geographic presence and enhance the diagnostics expertise and testing services, including environmental testing, which Pharmaq’s reference lab Pharmaq Analytiq now can offer fish farmers in major aquaculture markets. This mighthave affectedthe performance x`in the second quarter.

What Our Model Indicates

Our proven model does not conclusively predict an earnings beat for Zoetis this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here as you will see below.

Earnings ESP: Zoetis has an Earnings ESP of -2.37%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company carries a Zacks Rank #3.


Zoetis Inc. Price and EPS Surprise

Zoetis Inc. Price and EPS Surprise

Zoetis Inc. price-eps-surprise | Zoetis Inc. Quote

Stocks to Consider

Here are some biotech stocks that have the right mix of elements to beat on earnings this time around:

ACADIA Pharmaceuticals Inc. ACAD has an Earnings ESP of +4.23% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

bluebird bio Inc. BLUE has an Earnings ESP of +69.18% and a Zacks Rank of 3.

Amarin Corporation Plc. AMRN has an Earnings ESP of +72.73% and is Zacks #4 Ranked.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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