Zoetis Q1: U.S. Companion Animal Slump Drives 21% Selloff; Guidance Trimmed

Transcript intelligence

What changed

FY2025 delivered 6% organic growth with a bullish score of 78. Q1 FY2026 saw organic revenue go flat, the U.S. companion animal segment fall 8%, and the bullish score drop to 55. Guidance floors were lowered by one percentage point on both revenue and adjusted net income. New developments include the acquisition of Neogen's animal genomics business, early launches of Lenivia and Portela in Europe and Canada, and Canadian regulatory approval of Convenia RTU.

Guidance delta

FY2026 revenue growth guidance was lowered from 3%-5% to 2%-5%. Adjusted net income growth guidance was lowered from 3%-6% to 2%-6%. Both ceilings were unchanged; only the floors were reduced by one percentage point. Guidance sentiment was characterized as maintained.

Key takeaways

• Organic revenue was flat in Q1, a sharp slowdown from 6% growth in FY2025, as U.S. companion animal sales declined 8%.
• EPS of $1.53 missed consensus of $1.60 by 4.4%; revenue of $2.26B missed estimates of $2.30B by 1.7%.
• International grew 10% organically and livestock rose 12%, partially offsetting U.S. weakness.
• FY2026 guidance floors were trimmed to 2%-5% revenue growth and 2%-6% adjusted net income growth.
• The stock fell 21% on the report and drifted an additional 9% lower in subsequent weeks.

Management priorities

• Launch Lenivia and Portela in Europe and Canada
• Roll out Convenia RTU in Canada following regulatory approval
• Introduce Cytopoint Plus and other long-acting monoclonal antibodies
• Accelerate science-to-scale model to reduce time to market
• Continue cost and productivity initiatives alongside targeted DTC loyalty programs