Zoetis Inc. (NYSE:ZTS) reported second-quarter adjusted earnings of $1.87 per share, beating the consensus of $1.86.
The animal health company reported sales of $2.468 billion, missing the consensus of $2.502 billion. Revenue was flat year over year, decreasing 1% on an organic operational basis.
Zoetis Sees Softer Companion Animal Demand And Rising Competition
"Second quarter results reflected a more pressured Companion Animal market, as lower clinic visits and pet owner price sensitivity reduced demand across parts of our portfolio and heightened competition in key categories," said Kristin Peck, CEO of Zoetis.
"We are adapting our commercial strategy to the marketplace in front of us, deploying targeted investments, accelerating innovation, and pursuing business development to strengthen our position in areas aligned with the future of animal health," Peck commented.
The company, in its earnings call, said it faces competitive pressures, particularly in the dermatology and parasiticides sectors, with new entrants using aggressive pricing strategies.
The company also said it is moving with urgency as we navigate the current environment.
U.S. Companion Animal Sales Decline While Livestock Business Strengthens
Revenue in the U.S. segment reached $1.3 billion, decreasing 7%. Companion animal product sales decreased 11% due to continued softer end-market demand.
The company’s key dermatology franchise and Simparica Trio faced persistent macro-driven price sensitivity and heightened competitive pressure.
Generic competition also impacted Cerenia and Convenia brands, as well as lower sales of Librela.
U.S. livestock product sales increased 23%, supported by strength across cattle and poultry.
Cattle performance was underpinned by favorable producer economics in beef cattle and supply timing. Poultry performance benefited from increased vaccine sales tied to disease outbreak activity.
Cuts 2026 Guidance As Market Headwinds Persist
Zoetis updated its 2026 outlook to reflect the headwinds expected to continue in the near term.
The company lowered fiscal 2026 adjusted earnings guidance from $6.85-$7.00 per share to $6.15-$6.25, compared with consensus of $6.88.
Zoetis also cut its 2026 sales guidance from $9.680 billion-$9.96 billion to $9.12 billion-$9.32 billion, compared to the consensus of $9.726 billion.
Management Transition
On Thursday, Zoetis appointed James (Jay) Saccaro as Executive Vice President, CFO and COO, effective August 17.
With Saccaro’s appointment, Wetteny Joseph will transition to an advisory role.
ZTS Price Action: Zoetis shares were up 3.84% at $77.25 at the time of publication on Thursday, according to Benzinga Pro data.
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