Zoetis Delivers Strong Operational Results for 2022; No Change to Our Fair Value Estimate

Zoetis capped off 2022 with strong performance in the fourth quarter, and our minor adjustments weren't enough to materially move our fair value estimate. For the full year, Zoetis delivered 8% operational revenue growth along with 11% adjusted earnings growth, which is largely consistent with Zoetis' prepandemic performance. Though shares are now fairly valued in our view, we remain enthusiastic about Zoetis' wide economic moat. From quarter to quarter through 2022, we saw evidence of this wide moat in the ongoing adoption of its companion animal therapies across different disease states. Zoetis has racked up a stellar track record of innovative therapies for dogs and cats that once again saw double-digit growth in the fourth quarter, with the U.S. up 12% and international up even higher at 21% in operational growth. We see little in the competitive landscape to rock Zoetis' intangible assets in the companion animal segment.