Middle Coast Investing on Zoetis Inc.
Thesis
Zoetis is a leading supplier of pharmaceuticals for pets and livestock, supported by a product pipeline and extensive history in animal health. Slowing growth and competition, combined with consumer cost pressure, have left the stock much cheaper. The investor initiated a small position on the view that guidance cuts and disappointment may be largely priced in, while acknowledging more short-term weakness is possible.
“We did not make this a big position yet, and we could be in for more bumps in the short term.”
Key risks
- Competitive pressure in animal medicines
- Inflation-driven trade-down by pet owners
- Revenue and profit guidance reductions
- Further near-term growth disappointment