Goldman Sachs’ Jami Rubin believes that while Zoetis Inc ZTS's stock is fairly valued at present, it has limited upside potential of about 2 percent.
Rubin downgraded the rating on the company from Neutral to Sell, while raising the price target from $46 to $48.
Stock Outlook
“Though we believe that the company’s fundamentals and prospects for growth are sound, in our view, the current valuation reflects the full upside associated with the margin expansion story,” the analyst mentioned.
Rubin expects only a few significant catalysts for the stock in the near term.
The analyst also pointed out that Zoetis’ shares had underperformed year-to-date, declining 1.8 percent, as compared to the 1.1 percent appreciation in the S&P 500, despite the continued strength of the company’s fundamentals.
Rubin expects Zoetis to achieve a CAGR of 38.1 percent by 2020, driven by meaningful operating margin improvement, from 27.9 percent CAGR in 2015.
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