Core Viewpoint - Diamond Hill Capital's "Large Cap Fund" investor letter for Q4 2025 highlights a cautious stance on AI-driven market enthusiasm while emphasizing the attractiveness of fundamentally stable, high-quality, cash-generative businesses [1] Group 1: Market Performance - The Russell 1000 Value Index increased by 3.8% in Q4 2025, with the information technology sector rising by 11% and communication services by 9%, driven by AI optimism [1] - The Fund returned 1.41% in Q4, underperforming the Russell 1000 Value Index [1] Group 2: Zoetis Inc. Performance - Zoetis Inc. (NYSE:ZTS) is identified as a leading relative detractor for the Fund, with its stock closing at $124.94 on February 2, 2026, and a 27.46% decline over the past twelve months [2][3] - The company reduced its 2026 outlook due to fewer veterinary visits by pet owners, leading to underperformance in Q4 [3] Group 3: Investment Sentiment - Despite acknowledging Zoetis Inc.'s potential, the company is not among the 30 most popular stocks among hedge funds, with a decrease in hedge fund portfolios holding the stock from 75 to 72 [4] - The Fund believes certain AI stocks present greater upside potential and less downside risk compared to Zoetis Inc. [4]

Core Insights - IDEXX Laboratories reported double-digit growth in the fourth quarter, driven by premium instrument placements and increased diagnostic utilization, despite ongoing pressure on U.S. veterinary visit volumes [5][12][19] Group 1: Financial Performance - Fourth-quarter revenue increased by 14% as reported and 12% organically, with a notable 10% organic growth in CAG Diagnostics recurring revenues [4][12] - The company achieved an EPS of $3.08, reflecting a 17% increase on a comparable basis [4] - Operating profit grew by 21% as reported and 17% on a comparable basis, supported by gross margin gains [12] Group 2: Market Trends and Challenges - U.S. same-store clinical visits declined approximately 1.7% in the fourth quarter and 1.9% for the full year 2025, with wellness visits down 3.6% [2][5] - Management indicated that wellness pressure is more macro-driven, particularly affecting lower-income households, while non-wellness visits have shown resilience [1][5] Group 3: Product Innovations and Developments - IDEXX highlighted record placements of premium instruments, with over 1,900 inVue Dx placements contributing to a 69% year-over-year expansion in CAG Diagnostics instrument revenues [3][7] - The inVue Dx was characterized as "transformational," with nearly 6,400 placements in 2025 and a controlled launch of fine needle aspirate (FNA) for mast cell tumor detection [8][9] - The company plans to expand its Cancer Dx panel to include canine mast cell tumor detection, with North America availability expected mid-2026 [9][11] Group 4: 2026 Outlook - For 2026, IDEXX projects revenue between $4.632 billion and $4.72 billion, indicating a reported growth of 7.6%–9.6% and organic growth of 7%–9% [14][15] - CAG Diagnostics recurring revenues are expected to grow 8%–10% organically, with a projected net price realization of about 4% [15] - IDEXX anticipates operating margins of 32.0%–32.5% for 2026, with improvements largely driven by gross margin growth [17]

Group 1 - Zoetis Inc. (NYSE:ZTS) is recognized as one of the most profitable healthcare stocks to consider for investment, with a current price target of $130 set by Stifel Nicolaus, indicating a potential upside of 4.91% [1] - Piper Sandler downgraded Zoetis from Overweight to Neutral, reducing the price target from $190 to $135, citing concerns over the company's innovation timeline and projecting a potential "innovation air pocket" lasting one to two years [2] - Morgan Stanley also adjusted its price target for Zoetis, lowering it from $175 to $160 while maintaining an Overweight rating, suggesting a favorable environment for healthcare companies in 2026 despite current challenges in managed care stocks [3] Group 2 - Zoetis Inc. is a New Jersey-based company established in 1950, specializing in a range of health products including animal health medicines, vaccines, biodevices, and genetic tests, with a goal to become the most valuable animal health company [4]

Group 1: Company Innovations - IDEXX Laboratories launched the ImageVue DR50 Plus, an advanced veterinary imaging system that offers high-definition, AI-powered diagnostics with up to 25% less radiation than its previous model and 60% less than other solutions [1] - The new imaging system is designed to improve safety and efficiency, reducing retakes, supporting new panel sizes, and integrating with IDEXX's Web PACS, telemedicine, and ezyVet software [1] Group 2: Leadership Transition - Michael Erickson will become President and CEO of IDEXX Laboratories effective May 12, 2026, succeeding Jonathan Mazelsky, who will transition to executive Chair of the Board and retire after the 2027 annual shareholder meeting [2] - Analysts at Stifel expect a seamless transition and believe Erickson will benefit from IDEXX's portfolio of recently launched products [3] Group 3: Market Position and Growth - IDEXX Laboratories is recognized as a global leader in animal health diagnostics and software, providing essential tools for veterinarians and diagnostic testing for livestock, poultry, and water quality [4] - Stifel analysts project a fourth-quarter 2025 Companion Animal Group Diagnostics recurring organic revenue growth estimate of 8.9% [3]

Group 1 - Neogen Corporation has initiated a voluntary nationwide recall of all unexpired lots of its Neogen Vet HYCOAT Hyaluronate Sodium Sterile Solution due to identified microbial contamination in certain batches [1] - The recall specifically includes HYCOAT 10 mL/50 mg vials manufactured by a third-party supplier, with adverse event reports received in horses following intra-articular injections, which is inconsistent with the product's labeling [2] - As a precaution, the company is also recalling all unexpired lots of the 2 mL/20 mg vials, warning that affected products should no longer be considered sterile and could pose an infection risk [3] Group 2 - The stock price of Neogen Corporation (NEOG) has decreased by 2.80%, trading at $10.06 at the last check [3]

Core Insights - Phibro Animal Health Corp. (PAHC) is set to announce its second-quarter fiscal 2026 results, with expectations of continued strong performance based on previous earnings trends [1][3]. Group 1: Financial Performance - In the last reported quarter, PAHC achieved adjusted earnings per share (EPS) of 73 cents, exceeding the Zacks Consensus Estimate by 23.7% [1]. - The Zacks Consensus Estimate for second-quarter revenues is $357 million, reflecting a 15.4% increase year-over-year, while the EPS estimate stands at 69 cents, indicating a 27.8% growth from the previous year [2][7]. Group 2: Business Segments - The Animal Health segment is expected to maintain momentum, driven by the strong performance of the Medicated Feed Additives (MFA) portfolio, along with gains in Nutritional specialties and Vaccines [4]. - Nutritional Specialties are anticipated to see increased net sales due to higher demand for microbial and companion animal products, bolstered by the launch of Restoris piezoelectric dental gel [5]. - Vaccine sales are projected to benefit from growth in poultry products in Latin America and increased international demand, with an overall expected increase of 21.4% in Animal Health sales year-over-year [6]. - The Mineral Nutrition segment may experience an 8.7% decline in sales year-over-year, influenced by fluctuating customer buying patterns and seasonal variability [8]. - Performance Products are forecasted to grow by 20.2% year-over-year, driven by higher demand for ingredients used in personal care products [9]. Group 3: Strategic Initiatives - Phibro's company-wide initiative, Phibro Forward, aims to unlock additional revenue growth and cost savings, enhancing operational discipline and innovation [10].

Group 1: Market Overview - Global equity markets showed strong performance in Q4 2025, supported by easing inflation and positive economic data [1] - The Hardman Johnston Global Equity Strategy achieved a return of 2.91%, while the MSCI AC World Net Index gained 3.29% [1] - The Financials and Consumer Staples sectors positively impacted performance, whereas the Industrials and Consumer Discretionary sectors had a negative effect [1] Group 2: Elanco Animal Health Incorporated - Elanco Animal Health Incorporated (NYSE:ELAN) is highlighted as a leading company in the animal health sector, with a market capitalization of $12.233 billion [2] - The stock closed at $24.62 per share on January 27, 2026, with a one-month return of 8.79% and a three-month gain of 100.33% [2] - The company has initiated a turnaround strategy under a new CFO, focusing on a balanced mix of companion and farm animals, with a shift towards companion animals expected to enhance margins and growth [3] - Elanco plans to launch seven potential blockbuster products from 2023 to 2026, which is anticipated to lead to margin expansion and improved portfolio leverage [3] - The sale of its aqua business has reduced the company's net debt/EBITDA ratio to below 4x, indicating improved financial health [3] Group 3: Hedge Fund Interest - Elanco Animal Health is not among the top 30 most popular stocks among hedge funds, with 26 hedge fund portfolios holding the stock at the end of Q3 2025, an increase from 25 in the previous quarter [4] - Despite its potential, some analysts suggest that certain AI stocks may offer greater upside potential and lower downside risk compared to Elanco [4]

Core Viewpoint - Zoetis Inc. is experiencing near-term uncertainty but maintains long-term appeal due to its diverse product pipeline and potential blockbuster candidates [2][3][4]. Group 1: Analyst Downgrade and Market Sentiment - Piper Sandler downgraded Zoetis from Overweight to Neutral and reduced its price target from $190 to $135, citing uncertainty in the near term [2]. - The firm expressed concerns about the current consumer spending environment and its impact on Zoetis' planned product launches in 2026 [3]. Group 2: Product Pipeline and Innovation - Zoetis is described as being in an "innovation lull," with a potential air pocket lasting one to two years, which raises questions about its near-term growth [3]. - The company highlighted a robust pipeline during its Innovation Webcast, featuring 12 candidates with blockbuster potential across various therapeutic areas, including chronic kidney disease and oncology [4]. - Zoetis is also focusing on next-generation treatments in established franchises such as osteoarthritis pain and dermatology, indicating a balanced strategy of geographic expansion and lifecycle extensions [5]. Group 3: Company Overview - Zoetis Inc. is a global leader in animal health, dedicated to developing and commercializing a wide range of products, including medicines, vaccines, diagnostics, and precision health tools for animals [6].

Group 1 - The webinar is focused on Zomedica's technology innovation and aims to provide insights into the company's product platforms and the team driving its success [1][2] - The presentation includes forward-looking statements regarding future expectations, plans, and prospects, emphasizing the potential for actual results to differ [1][2] - The company expresses excitement about engaging with current and potential investors to enhance their understanding of the value delivered to veterinarians and shareholders [2] Group 2 - Larry Heaton, the Chief Executive Officer of Zomedica, is set to present during the webinar, indicating leadership involvement in communicating the company's vision [3]

Core Insights - The integration of advanced AI capabilities into Zomedica's TRUVIEW® AI digital microscopy system enhances diagnostic speed, consistency, and workflow efficiency for veterinary clinics [1] Company Developments - Zomedica Corp. has announced the incorporation of AI interpretation capabilities into its TRUVIEW® system, which will automate the interpretation of hematology blood films [1] - The company plans to extend the AI functionality to include skin and ear cytology in the near future [1]