Zoetis Is The Only Publicly-Traded Pure-Play Animal Health, Vaccine Co.

• Zoetis Inc ZTS shares have appreciated 11.85 percent year to date, trading at their 52 week high of $55.38 on June 25.
• Argus’ John Eade has maintained a Buy rating on the company, with a price target of $57.
• While the company has raised its EPS guidance and dividend, Eade believes that the stock would see upside as the company proves to Wall Street that it can meet and beat expectations.

According to the Argus report, “Zoetis is the only publicly traded pure-play animal health and vaccine company and is the market leader in revenue. The company benefits from broad diversification across product categories, with a wide range of products for cattle, swine, poultry, and companion animals.”

Analyst John Eade noted that the stock has appreciated over the past year, with activist stakeholders, including William Ackman, have begun to work with management to improve shareholder returns.

Eade also mentioned that “Zoetis has also been mentioned as a potential takeover target, as healthcare M&A has had its strongest year ever, with more than $600 billion in deals.”

Operating in an industry that has robust growth potential, Eade believes that the company would be able to optimize its leadership position, with its diversified product categories enabling Zoetis to mitigate weak sales in any segment with stronger sales in others.

“Looking ahead, our forecasts assume that growth picks up into 2017, as issues such as weather and inventory-stockpiling are cycled through, and the benefits of restructuring kick in,” Eades added.

The company has raised its 2015 adjusted EPS guidance from $1.63-$1.68 to $1.70-$1.74, while marginally tightening its revenue guidance from a range of $4.7-$4.775 billion to $4.7-$4.75 billion.