Zoetis Shares Attract Analyst Attention After Steep Decline

Following a significant drop in its share price over the past year, the animal health company Zoetis is drawing renewed scrutiny from market analysts and institutional investors. While the stock remains under pressure, fresh assessments and recent buying activity suggest the prolonged downtrend may be nearing its conclusion.

Recent filings detailing stake acquisitions reveal a notable uptick in interest from major investment firms. Guggenheim Capital LLC increased its position in Zoetis by 4.9 percent last week. In a more substantial move, OMERS Administration Corp boosted its holding by 63.8 percent. These purchases contrast with sales from other entities, such as M&T Bank, which reduced its stake by 6.2 percent.

This institutional activity unfolds against a backdrop of pronounced weakness for the equity. Over the last twelve months, the stock has lost approximately 30 percent of its value. Concerns over slowing growth in key product segments, including the osteoarthritis treatments Librela and Solensia, have been primary drivers of the sell-off.

Analyst Sentiment: Cautious Optimism Prevails

The current mood among research analysts is mixed but leans positive. According to data from MarketBeat, the average price target from twelve covering firms stands near $178.89. This represents a substantial potential upside from the current trading level around $120. These evaluations follow the company’s recent "Innovation Day" presentation.

This week, the investment bank BTIG reaffirmed its "Buy" rating with a $160 price target, highlighting Zoetis's promising pipeline portfolio. This portfolio addresses a total market opportunity exceeding $5 billion. Key growth drivers identified include treatments for chronic kidney disease in pets, anticipated for launch in 2027, and new cancer therapies slated for the 2028-2030 period. Bank of America also maintains its "Buy" recommendation.

Should investors sell immediately? Or is it worth buying Zoetis?

A more cautious perspective comes from TD Cowen, which lowered its price target from $189 to $150. However, the firm retained its buy rating, indicating the adjustment reflects a more conservative view of near-term prospects rather than a loss of faith in the company's solid fundamentals.

Valuation Gap Sparks Debate

Fundamental analysts argue the stock's decline has been overdone. A discounted cash flow analysis published by Simply Wall St. on Friday estimates the shares are trading at a roughly 32 percent discount to an intrinsic value of about $177. Furthermore, the current price-to-earnings (P/E) ratio of 20.0 sits below the estimated fair value P/E of 24.7.

The company's latest quarterly results, released in November for Q3 2025, provided a slight upside surprise with earnings per share of $1.70. Management also confirmed its full-year guidance.

Pipeline Execution is the Key Catalyst

For investors, the successful development and commercialization of the pipeline products showcased at the Innovation Day remains the central focus. While significant revenue contributions from the kidney disease and oncology segments are not expected until 2027 through 2030, regulatory milestones achieved as early as next year could positively influence market sentiment.

The long-term outlook for the animal health market remains robust, with projections pointing to a doubling in size by 2035. This expansive growth trajectory is a key factor underpinning the optimistic long-term assessments from many market experts watching Zoetis.