Zoetis Sees Companion Animal Strength in Q1 Despite Pressure in Livestock Segment; FVE Unchanged

Zoetis reported first-quarter results that were muted by strengthening foreign-currency headwinds, but it remains on track to meet our full-year expectations, and we’re holding steady on our fair value estimate. Coming off last year’s exceptionally strong performance, we anticipate moderation this year that will leave top- and bottom-line growth closer to prepandemic rates. We remain confident in the company’s wide economic moat, which rests on cost advantage and intangible assets. We think the latter is where the action is right now, and we're impressed by the early European commercial uptake of monoclonal antibody Librela for arthritis in dogs. Zoetis’ push into mAbs for companion animals puts the firm significantly ahead of competitors and offers a strong product to address a large and undertreated market.