Nomura Value Fund on Zoetis Inc.
Thesis
Zoetis sold off after weaker-than-expected revenue and earnings, softer US companion-animal demand and reduced full-year guidance. The fund views the US weakness as cyclical rather than structural, while international and livestock performance remains solid. Over the longer term, the team believes Zoetis can resume its growth trajectory and benefit from valuation multiple expansion.
“At this point, we believe the company’s challenges in the US market are cyclical and that, longer term, Zoetis can resume its growth trajectory and see its valuation multiple expand.”
Key risks
- Softer US companion-animal demand and fewer veterinary visits
- Increasing competition for key products