Market Overview

BMO Downgrades Zoetis After Valeant Report


In a report published Friday, BMO Capital analyst Alex Arfaei downgraded the rating on Zoetis Inc (NYSE: ZTS) from Outperform to Market Perform, while raising the price target from $51 to $57, following the almost 29 percent increase in the share price year-to-date.

The analyst believes that the company could be acquired for about $60 per share, representing about 8 percent upside to the stock's closing price on Thursday. However, in the absence of the takeout premium, the share price could fall as much as 15-20 percent.

"We believe it would be very difficult for ZTS management to argue that they could generate similar near-term value for ZTS shareholders, especially after their recently announced operational efficiency initiative. This should support the prospects for a potential deal, in our view," Arfaei stated.

The analyst believes that there is a high probability of Zoetis being acquired. The company has a productive R&D division, with new drugs like Apoquel, which are promising. "Therefore, ZTS, as the best-in-class animal health company, unquestionably deserves a premium, in our view," Arfaei added.

Latest Ratings for ZTS

Aug 2019MaintainsHold
Jul 2019MaintainsBuy
Jul 2019DowngradesBuyNeutral

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Posted-In: Alex Arfaei BMO CapitalAnalyst Color Downgrades Price Target Analyst Ratings


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