Evercore ISI's Mark Schoenebaum's Comments On Zoetis' Q2 Call

Shares of Zoetis Inc ZTS are slightly up on Tuesday trading after the company beat the Street’s consensus estimates on both the earnings and revenue front. Earnings came in at $0.43 per share, versus experts’ expectations for $0.38 per share; revenue reached $1.175 billion, surpassing the Street’s estimate of $1.116 billion.

In an email sent to investors right after the conference call, Evercore ISI’s Mark Schoenebaum shared a few highlights from the second quarter.

• Management trimmed its guidance for 2015 Apoquel revenue to the lower end of its previous range -- $150 million. The expert notes that there are “issues with scaling up API manufacturing but the company now believes that it has a manufacturing process that will be able to meet demand ‘very soon.’” Moreover, the company sees Apoquel sales increasing significantly in 2016.
• Zoetis is "ready to look at M&A opportunities" and has interest in both marketed products and pipeline assets.  The company desires assets that complement its existing business or provide it with larger exposure to areas in which it is currently underrepresented, like genetics and diagnostics. If the right opportunity came up, the company said it would be willing to more aggressively use debt, although only "few companies" make sense in inversions.
• In the R&D arena, Zoetis has plans to grow new products faster than its industry peers. The latter are growing at mid-single digits, with roughly 1 percent coming from new products.
• Management guided slightly heavier opex for the second half of the year, compared to the first half.