Zoetis faced a challenging first quarter of 2026 as its results missed Wall Street’s expectations, prompting a significant negative reaction from investors. Management attributed the underperformance to a convergence of factors, including increased price sensitivity among pet owners, lower veterinary clinic traffic, and intensified competition in key pet care categories. CEO Kristin Peck noted that “the quarter unfolded differently than expected, particularly in companion animal,” emphasizing that aggressive pricing and new market entrants compressed growth, especially in dermatology and parasiticide franchises. The company also highlighted that unfavorable weather, such as winter storms, further reduced clinic visits, compounding these headwinds.
Is now the time to buy ZTS? Find out in our full research report (it’s free for active Edge members).
Zoetis (ZTS) Q1 CY2026 Highlights:
- Revenue: $2.26 billion vs analyst estimates of $2.31 billion (2.9% year-on-year growth, 2.1% miss)
- Adjusted EPS: $1.53 vs analyst expectations of $1.62 (5.3% miss)
- Adjusted EBITDA: $985.9 million vs analyst estimates of $1.05 billion (43.6% margin, 5.8% miss)
- The company dropped its revenue guidance for the full year to $9.82 billion at the midpoint from $9.93 billion, a 1.1% decrease
- Management lowered its full-year Adjusted EPS guidance to $6.93 at the midpoint, a 1.8% decrease
- Operating Margin: 35.4%, down from 36.9% in the same quarter last year
- Market Capitalization: $31.17 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Zoetis’s Q1 Earnings Call
- Michael Ryskin (Bank of America) asked about the sustainability of competitive pressures and near-term strategies to offset them. CEO Kristin Peck emphasized ongoing share stabilization in key franchises and targeted affordability initiatives, while CFO Wetteny Joseph explained that guidance assumes continued headwinds and no immediate rebound in distributor inventory.
- Erin Wilson Wright (Morgan Stanley) questioned the implied recovery in guidance and whether inventory restocking was anticipated. Joseph clarified that no meaningful inventory rebound is assumed, attributing stabilization to easier comparables and direct commercial actions rather than channel dynamics.
- Brandon Vazquez (William Blair) challenged whether structural changes in the animal health market make it less attractive long-term. Peck insisted demand for veterinary care remains structurally strong, with long-term stabilization expected as price-driven promotions and consumer adjustments normalize.
- Christopher Schott (JPMorgan) probed on pricing strategies amid competitive promotions and the outlook for U.S. companion growth. Peck reiterated Zoetis' focus on maintaining premium positioning and selective promotional activity, while Joseph signaled low to mid-single-digit growth expectations in key franchises, with livestock driving momentum.
- Jon Block (Stifel) asked if Zoetis is changing its approach to pricing or promotions in response to consumer affordability concerns. Peck explained that the company is enhancing point-of-sale loyalty and affordability programs for pet owners, rather than broadly lowering product prices.
Catalysts in Upcoming Quarters
In upcoming quarters, the StockStory team will be watching (1) whether Zoetis can stabilize U.S. companion animal sales through targeted affordability and loyalty initiatives, (2) the trajectory of new product launches, particularly long-acting monoclonal antibodies and the integration of Neogen’s genomics business, and (3) continued momentum in livestock and diagnostics. Progress on cost discipline and portfolio optimization will also be critical for gauging execution.
Zoetis currently trades at $74.55, down from $111.22 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).
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