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Morgan Stanley initiated coverage on Zoetis
ZTS with an Equal-weight rating.
Morgan Stanley analyst David Risinger commented, "ZTS is a global leader in animal health, and we expect mgmt. to deliver mid-teens EPS growth over the next several years. However, ZTS shares are up 30% (vs. S&P +4%) since IPO on Feb. 1, and we see a balanced risk reward at 24x our 2013E EPS. […] At 24x our 2013E EPS of $1.41 (20x 2014E EPS) and 16x our ‘13E EBITDA (14x 2014E EBITDA), ZTS trades at a premium to Large-Cap Growth companies like Monsanto, Mead Johnson, and Perrigo as well as SMID-Cap Animal Health companies like Idexx, VCA, and Virbac. Given ZTS's premium multiple on EPS and EBITDA, we think material EPS upside is required to drive stock outperformance."
Zoetis closed at $34.18 on Tuesday.
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