Fundsmith Equity Fund Performance - Fundsmith Equity Fund's T Class Accumulation shares returned 0.8% in 2025, underperforming the MSCI World Index which returned 12.8% [1] - Since inception, the fund has outperformed the index by 1.7% per annum [1] - Underperformance in 2025 attributed to index concentration, growth of assets in Index Funds, and dollar weakness [1] Investment Focus and Strategy - Fundsmith Equity Fund highlighted Zoetis Inc. (NYSE:ZTS) as a key investment in its fourth-quarter 2025 letter [2][3] - The fund sold stakes in Brown-Forman and PepsiCo, and began purchasing Zoetis, EssilorLuxottica, Intuit, and Wolters Kluwer [3] - Zoetis is recognized as a leading veterinary pharmaceutical company, benefiting from long-term growth in pet healthcare spending [3] Zoetis Inc. Overview - Zoetis Inc. reported a market capitalization of $56.36 billion [2] - The company generated revenue of $2.4 billion in Q3 2025, reflecting a 1% increase on a reported basis and 4% on an organic operational basis [4] - Zoetis's share price faced challenges due to concerns over side effects from its drug Librela, although it remains prescribed by veterinarians [3] Hedge Fund Interest - Zoetis Inc. was held by 72 hedge fund portfolios at the end of Q3 2025, a slight decrease from 75 in the previous quarter [4] - Despite its potential, the company is not among the 30 most popular stocks among hedge funds [4]

Core Insights - The Fundsmith Equity Fund reported a total return of +0.8% for 2025, underperforming the MSCI World Index which rose by +12.8% [4][7]. - Since inception on November 1, 2010, the Fund has outperformed the Index by 1.7% per annum with a Sortino Ratio of 0.75, indicating less downside volatility compared to the Index [7][8]. - The Fund is ranked as the third best performer in the Investment Association Global sector of 155 funds since inception, with a return 322 percentage points above the sector average [8]. Performance Analysis - The Fund's performance in 2025 was impacted by three main issues: index concentration, the growth of assets in index funds, and dollar weakness [9][10][36]. - The top ten stocks in the S&P 500 accounted for 39% of its value and contributed 50% of its total return in USD by the end of 2025, highlighting significant market concentration [13][10]. - The rise of index funds has led to a momentum strategy that disproportionately benefits large-cap stocks, making it challenging for active funds to compete without holding these stocks [17][20]. Market Dynamics - The US dollar weakened against the pound from approximately $1.25/GBP to $1.35/GBP during 2025, affecting the GBP value of the Fund as most companies are US-listed [36][40]. - The price of gold reached a 50-year high of $4,319 per ounce, reflecting concerns about dollar strength and market conditions [39]. Portfolio Composition - The Fund's portfolio turnover was low at 12.7%, with a total cost of investment (TCI) of 1.06%, indicating a focus on minimizing trading costs [70][72]. - The weighted average free cash flow yield of the portfolio increased from 3.1% to 3.7% during 2025, suggesting improved valuation relative to the S&P 500 [68][69]. Stock Contributions - The top five detractors from the Fund's performance included Novo Nordisk, Automatic Data Processing, Church & Dwight, Coloplast, and Fortinet, with Novo Nordisk facing significant challenges in its market [45][46]. - Conversely, the top contributors were Alphabet, IDEXX, Philip Morris, Meta Platforms, and Microsoft, with Alphabet making its first appearance among the top contributors [51][52]. Investment Strategy - The Fund maintains a strategy focused on investing in high-quality companies with predictable growth and adequate returns on capital, avoiding momentum-driven investments [41][42]. - The Fund's management emphasizes the importance of understanding the underlying business performance and maintaining a long-term perspective on investments [60][79].

Group 1 - The stock selection process showed positive momentum in December, with an average gain of 0.83% for the selected 15 stocks [1] - The SPDR® S&P 500® ETF was mentioned as a benchmark for performance comparison [1] Group 2 - The analyst holds long positions in various companies, including ZTS, MSCI, DPZ, and others, through stock ownership, options, or derivatives [2] - The article reflects the analyst's personal opinions and is not influenced by compensation from any company mentioned [2]

Group 1 - The article highlights the potential for above-average market returns by identifying underperforming stocks that may rebound, particularly in the context of a strong overall market performance [1] - Viking Therapeutics and Zoetis are identified as two healthcare stocks that have underperformed in 2025 but may see significant improvements in 2026 [2] - Viking Therapeutics is a clinical-stage biotech company with promising developments in weight management, specifically its investigational GLP-1 anti-obesity medicine VK2735, which is currently in phase 3 studies [4][5] Group 2 - Viking Therapeutics has faced challenges due to profit-taking by investors and high patient dropout rates in mid-stage trials, but the efficacy of VK2735 remains strong, suggesting potential for recovery [6][7] - The company is developing an oral formulation of VK2735, which could enhance its market position in the growing weight loss drug sector [5][6] - Positive clinical and regulatory progress for Viking Therapeutics could lead to a rebound in its stock price as early as next year, making it a stock worth considering [7]

Core Insights - Zoetis Inc. (NYSE:ZTS) has been recognized as one of the 14 Best Pharma Dividend Stocks to Buy in 2026 [1] - BofA downgraded Zoetis from Buy to Neutral and reduced its price target from $165 to $135 [2] - Health Canada approved Portela™ (relfovetmab injection) for osteoarthritis pain relief in cats, which is expected to be commercially available in Canada and the EU by 2026 [3][4] Product Development - Portela is designed to provide up to three months of pain relief from osteoarthritis with a single injection, targeting anti-nerve growth factor (NGF) [3] - A nine-month field trial in Europe demonstrated Portela's effectiveness in reducing OA pain and its tolerability in cats, including those with kidney disease [4] - The approval of Portela signifies Zoetis's commitment to developing innovative therapies for companion animals, adding to its existing OA pain treatment portfolio [5] Company Positioning - Zoetis is the largest global animal health company, focusing on advancing animal care worldwide [6] - Despite the potential of Zoetis as an investment, some analysts suggest that certain AI stocks may offer greater upside potential with less downside risk [6]

Core Viewpoint - Zoetis Inc. will host a webcast and conference call to discuss its fourth quarter and full year 2025 financial results on February 12, 2026, led by CEO Kristin Peck and CFO Wetteny Joseph [1]. Group 1: Financial Results Announcement - The conference call is scheduled for 8:30 a.m. (ET) on February 12, 2026, where financial analysts will have the opportunity to ask questions [1]. - Investors and the public can access the live webcast through the Zoetis website, with pre-registration available starting today [2]. Group 2: Company Overview - Zoetis is recognized as the world's leading animal health company, focusing on advancing care for animals and supporting those who raise and care for them [3]. - The company has a strong portfolio and pipeline of medicines, vaccines, diagnostics, and technologies, impacting over 100 countries [3]. - In 2024, Zoetis generated revenue of $9.3 billion and employs approximately 13,800 people [3].

Group 1 - Zoetis Inc. is recognized as one of the 15 Dividend Stocks with low payout ratios and strong upside potential [1] - Morgan Stanley has lowered its price target for Zoetis to $160 from $175 while maintaining an Overweight rating, highlighting the attractive opportunities in healthcare technology and providers for 2026 [2] - Zoetis received regulatory approval from Health Canada for Portela™ (relfovetmab injection), a treatment for osteoarthritis pain in cats, which provides three months of pain relief with a single injection [3][4] Group 2 - Clinical studies demonstrated that Portela effectively reduced osteoarthritis pain in cats and was well tolerated, including in those with early-stage kidney disease [4] - Zoetis operates as the world's largest animal health company, focusing on advancing care for animals and supporting animal well-being across both companion and livestock markets [5]

Group 1: Healthcare Sector - The healthcare sector is highlighted as the best performing sector of the quarter, with a focus on the FDA's approval of the first GLP-1 pill from Novo [1] - Zoetis has been trading at a discount compared to Elanco since March 2021, with current trading at 19 times earnings, while Elanco trades at 23 times [2] - The total addressable market for the veterinary sector is projected to reach $100 billion by 2035, with Zoetis holding a 20% market share but facing execution challenges [4] Group 2: Company Performance - Zoetis has underperformed due to the CEO's inability to execute effectively, leading to a lower stock performance despite a favorable market [2][4] - The last three quarters have seen Zoetis meet expectations but lower future guidance, contributing to its stock struggles [3] - Piper Sandler suggests a mean reversion for Zoetis, indicating potential future rewards for supporting new product launches in 2026 and 2027 [5] Group 3: Metals and Mining - Metals, particularly gold and silver, have reached new record highs, with copper having its best year since 2009 [6] - Freeport-McMoRan is noted for its low trading multiple of 17 times earnings and a 7% free cash flow yield, making it a pure play on copper [7] - Execution issues at Freeport have affected its stock performance, while Aagasta is recognized as a better operator with significant production growth [8]

Company Performance - Zoetis (ZTS) closed at $123.78, reflecting a +1.26% change from the previous day's closing price, outperforming the S&P 500's gain of 0.64% [1] - The stock has increased by 0.15% over the past month, underperforming the Medical sector's gain of 2.25% and the S&P 500's gain of 3% [1] Upcoming Earnings - Analysts forecast Zoetis to report an EPS of $1.4, indicating no change from the same quarter last year, with expected quarterly revenue of $2.36 billion, up 1.89% year-over-year [2] Full-Year Estimates - The Zacks Consensus Estimates for Zoetis project earnings of $6.34 per share and revenue of $9.44 billion, representing year-over-year increases of +7.09% and +2%, respectively [3] Analyst Estimates and Stock Performance - Recent changes in analyst estimates for Zoetis are crucial as they often indicate shifts in near-term business trends, with positive revisions suggesting a favorable business outlook [3] - The Zacks Rank system, which incorporates estimate changes, has shown that stocks ranked 1 (Strong Buy) have yielded an average annual return of +25% since 1988 [4][5] Valuation Metrics - Zoetis is currently trading at a Forward P/E ratio of 19.3, which is lower than the industry average of 19.43 [6] - The company has a PEG ratio of 2.66, compared to the Medical - Drugs industry average PEG ratio of 1.17 [6] Industry Ranking - The Medical - Drugs industry, which includes Zoetis, holds a Zacks Industry Rank of 70, placing it in the top 29% of over 250 industries [7]

Market Overview - The global agriculture biotechnology market was valued at USD 84.39 billion in 2024 and is projected to reach USD 144.25 billion by 2030, growing at a compound annual growth rate (CAGR) of 9.4% during 2025–2030 [1][3] - Market growth is driven by the rising adoption of genetically modified (GM) crops, microbial biofertilizers, animal vaccines, and sustainable biotechnology-based agricultural inputs aimed at improving productivity and resilience [1][5] Regional Insights - North America currently leads the market, supported by a strong regulatory framework, continuous technological innovation, and the presence of major industry players such as Bayer, Corteva, BASF, and Novonesis [3][12] - Asia Pacific is emerging as the fastest-growing region, driven by rapid biotechnology adoption in countries including India, China, and Australia, along with favorable government initiatives promoting bio-based agriculture [3][12] Key Drivers - The agriculture biotechnology market is primarily driven by the increasing global demand for sustainable and efficient food production systems due to rapid population growth, declining arable land availability, and changing climatic conditions [5][6] - Significant technological advancements in genetic engineering, genome editing (CRISPR-Cas9), and microbial biotechnology are enabling the development of stress-tolerant crops, biofertilizers, and biopesticides [6][9] Market Segmentation - Plant biotechnology and microbial biotechnology segments are expected to account for a significant share of the agriculture biotechnology market, with plant biotechnology remaining dominant due to widespread adoption of GM crops [8][9] - The animal biotechnology segment is expected to register the fastest growth during the forecast period, supported by increasing focus on livestock health, productivity improvement, and sustainable protein production [10][11] Future Outlook - The agriculture biotechnology market is poised for robust growth in the next five years, driven by the convergence of biology, data, and sustainability [15][17] - Key predictions include continued growth in microbial biofertilizers and biostimulants, expansion of gene-editing technologies across commercial crops, and greater adoption of AI-enabled precision agriculture [17]