Zoetis (NYSE: ZTS) tanked after its November earnings release. Will history repeat itself pre-market on Feb. 12, when the animal healthcare company releases results for the fourth quarter of 2025? That's the question on the minds of many investors, less than a week before its earnings report hits the street. Whether the stock rallies after earnings or falls further afterward may depend on how closely the guidance updates align with current expectations. Fortunately for Zoetis, with expectations already wa ...

Core Insights - Zoetis has experienced a significant decline in stock price, dropping nearly 40% after a decade of outperforming the S&P 500 with a 480% increase [1][6] - The company's current price-to-earnings (P/E) ratio is at a historic low of 21, down from an average of 39 since 2013, indicating a potential long-term buying opportunity [2] - Zoetis remains a leader in the animal healthcare industry, with a strong pipeline of new therapies and a commitment to annual major market approvals [3] Company Performance - The company has 12 new therapies with "blockbuster" potential, which could generate over $100 million in sales, and currently has 17 blockbuster drugs [4] - Zoetis targets chronic kidney failure, oncology, and cardiology for dogs and cats, representing a $5 billion market opportunity against annual sales of $9.3 billion [4] - The company has consistently outperformed the global animal healthcare market, which is expected to grow at 5% to 6% annually through 2035, with Zoetis achieving 8% annualized sales growth since 2013 [5] Investment Considerations - Despite the recent stock decline, Zoetis' operations remain robust, supported by a promising pipeline and a steadily growing dividend [6] - The company does not require double-digit sales growth to be an outperformer, but it may achieve closer to that figure than market expectations [5]

Core Insights - Virbac has acquired an innovative drug from Norbrook to treat feline hyperthyroidism, enhancing its product portfolio in a growing market segment for senior cats [1][2][5] Acquisition Details - The acquisition is valued at approximately £100 million and is expected to positively impact Virbac's sales growth and EBITDA margin from the first year [2] - The drug, marketed as Thyronorm in the UK, Australia, and New Zealand, and Felanorm in the US, is designed to stabilize hyperthyroidism in cats [1][2] Market Context - Hyperthyroidism affects over 10% of older cats, leading to serious health issues if not managed properly [2] - The increasing number of household cats and their longer lifespans make such innovations crucial for managing chronic diseases [3] Product Characteristics - Thyronorm is a liquid formulation, which is easier to administer than tablets, allowing for precise dosing [3] - The product is currently generating revenue of €14 million, with in-market sales around €27 million, indicating strong market potential [4] Strategic Partnership - Norbrook will remain the manufacturer of the product, while Virbac will gradually take over distribution in various markets [4] - Virbac aims to leverage its global presence and veterinary relationships to enhance product accessibility and education for veterinarians and pet owners [4] Company Vision - The acquisition aligns with Virbac's commitment to advancing animal health and addressing unmet needs in the market for difficult-to-treat conditions [5] - Virbac emphasizes its dedication to integrating and growing innovative assets for sustainable growth [5][6]

Core Insights - The article highlights two undervalued dividend stocks, Zoetis and Nomad Foods, as attractive investment opportunities in a market characterized by high valuations for growth stocks [1][2]. Zoetis - Zoetis is a global leader in animal healthcare, generating over $100 million annually from 17 blockbuster products [5]. - The company has seen its market value decline by 50% since 2022, despite its leading position in the market [6]. - Currently trading at 20 times earnings, Zoetis is at its lowest valuation ever, making it appealing for dividend investors [9]. - The company maintains a strong innovation pipeline, with new monoclonal antibody drugs aimed at treating osteoarthritis in pets [10]. - Zoetis' livestock unit provides stability, as demand for protein is expected to rise, ensuring continued need for its products [11]. - The company has a return on invested capital (ROIC) of 22%, indicating strong profitability and cash returns to shareholders [12]. - Over the last decade, Zoetis has increased its dividend by 19% annually, with a current yield of 1.7% [13]. Nomad Foods - Nomad Foods is the leading frozen foods provider in Europe, particularly in the protein and vegetable categories [14]. - The stock has dropped 62% from its all-time high in 2021, trading at a low enterprise value to EBITDA ratio of 7 [15]. - Recent sales and adjusted earnings declined by 2% and 11% respectively, attributed to unusual weather affecting the frozen food market [17]. - The company is focusing on healthier food options, with new chicken offerings and protein bowls seeing a 34% increase in sales [19]. - Management prioritizes share repurchases as a key use of cash flow, having reduced share count by 4% annually over the last five years [21]. - Nomad has initiated a new dividend yielding 5.7%, utilizing only 46% of its net income [21]. - The CFO's personal investment of $1 million in Nomad shares signals confidence in the company's undervaluation [23].

Core Viewpoint - Long-term investors can achieve significant wealth through steady growth and dividend increases, despite market volatility [1][2] Group 1: Market Insights - Market fluctuations are normal and can be leveraged as opportunities to invest in long-term growth stocks that consistently pay and increase dividends [2] - The U.S. healthcare industry, accounting for over 17% of the economy, presents substantial growth potential with several healthcare stocks demonstrating impressive performance [2] Group 2: Company Profiles - **Zoetis**: Specializes in animal healthcare with $9.3 billion in annual sales, has raised dividends for 12 consecutive years, and is expected to grow earnings by 10% annually [5][6] - **Johnson & Johnson**: A healthcare conglomerate with a 63-year dividend increase streak, current dividend yield of 3.3%, and expected earnings growth of 8% annually [7][9] - **Abbott Laboratories**: A Dividend King with over 50 years of dividend increases, currently yielding 1.8%, and expected earnings growth of 9% annually [10][11] - **Stryker Corp.**: Focuses on orthopedic devices and has a 32-year dividend growth streak, with an estimated earnings growth of almost 10% annually [12][13] - **Medtronic**: Develops medical devices with a 3.2% starting yield and 47 consecutive years of dividend increases, expected earnings growth of over 5% annually [14][15]

Company Overview - Zoetis is a leading animal healthcare company that was spun off from Pfizer Animal Health in 2012, with annual sales of $9.3 billion [3] - The company develops and sells medicines, vaccines, diagnostics, genetic tests, and devices for treating livestock and pets [3] Industry Growth - The animal health market is projected to grow from $48 billion in 2023 to between $75 billion and $85 billion by 2033 [5] - Demand for animal protein is increasing due to global population growth, and younger generations are spending more on companion animals compared to older generations [4] Financial Performance - Zoetis has roughly doubled its annual sales over the past decade [5] - The company has consistently raised its dividend since paying its first one in 2013, with a current yield of just over 1.3% and an average annual growth rate of 21.4% over the past five years [6][7] Valuation Insights - The stock has historically traded at a high valuation, averaging a price-to-earnings (P/E) ratio of over 41 for the past decade [9] - Currently, Zoetis is at its lowest valuation on record at 27 times earnings, but it still has a PEG ratio of 2.7, indicating it may not be a bargain [12] Investment Considerations - The company is seen as a potential buy due to its strong market position and growth prospects, but investors are advised to consider gradual purchases in case of further market declines [12] - Zoetis's leadership in the expanding animal health field provides a durable growth runway for investors [8]