UPDATE: Bank of America Reiterates Buy Rating, Raises PT on Zoetis Following Positive News

In a report published Thursday, Bank of America analyst Robert M. Willoughby reiterated a Buy rating on Zoetis ZTS, and raised the price target from $36.00 to $40.00. In the report, Bank of America noted, “We are boosting our PO to $40 (from $36) on even greater conviction in our near term view on the heels of encouraging intra-quarter news flow that should bolster enthusiasm for the shares. We believe ZTS should trade more aligned with its peer group of animal health products companies. Our new PO implies 2015E P/E and EV/EBITDA multiples of 22.8x and 15.2x and is supported by our DCF valuation. While ZTS will face a difficult comp in the US (vs. US organic revenue growth of +10% in 3Q13), recent news of a new swine vaccine for PEDv (see note), accelerating QTD hospital same store sales for VCA (see note), and the building opportunity from other ongoing product launches (Georgia 08 vaccine full licensure and Engain/Actogain) should be additive, setting the stage for accelerated growth next year in the US, its largest geographic segment (40% of revenues), particularly when Apoquel, a potential blockbuster drug for atopic dermatitis in dogs, is fully ramped next year.” Zoetis closed on Wednesday at $35.76.