Zoetis misses Q4 estimates but lifts 2026 guidance
Animal health giant faces headwinds in US market as mAb products decline amid safety concerns
Zoetis reported fourth-quarter earnings that fell short of Wall Street expectations on Thursday, though the animal health giant offered investors a brighter outlook for 2026 that suggests confidence in its long-term trajectory.
The company posted adjusted earnings per share of $1.48 for the fourth quarter of 2025, missing analyst estimates by $0.14, while revenue reached $2.39 billion, slightly below the $2.41 billion consensus forecast. Despite the quarterly miss, Zoetis shares gained 0.4% to $128.67 in afternoon trading as investors focused on the company's raised full-year guidance.
The mixed performance reflects a tale of two markets for the world's largest animal health company. Zoetis's U.S. segment declined 2% on a reported basis, while international operations delivered 8% growth. However, the international strength includes a one-time fiscal alignment benefit of 2.5 to 3.5 percentage points that will not recur, according to the company's earnings report.
A significant drag on quarterly performance came from Zoetis's monoclonal antibody products, Librela for dogs and Solensia for cats, which both experienced sales declines. The downturn continues a troubling trend for these once-promising osteoarthritis treatments, which have faced mounting safety concerns and legal challenges. Reports of adverse events including ataxia, seizures, and accelerated joint destruction led to a U.S. label update for Librela in February 2025, according to industry reports.
Despite these near-term challenges, management moved to reassure investors with an upbeat 2026 outlook. The company set adjusted EPS guidance in a range of $7.00 to $7.10, representing growth of 9% to 11% from 2025's $6.41. Revenue guidance for 2026 stands at $9.825 billion to $10.025 billion, reflecting 3% to 5% organic growth expectations.
The divergent picture of current struggles versus future optimism has left analysts in a cautious stance. The average analyst rating on Zoetis shares remains "hold" with a mean price target of $152.45, according to MarketBeat data. That target represents roughly 18% upside from current levels, suggesting significant recovery potential if the company can execute on its guidance.
Analysts have expressed particular concern about growth deceleration in the companion animal market, which has faced pressure from declining veterinary visits and increasing competition. Those concerns were evident in the third quarter of 2025, when Zoetis lowered its full-year revenue guidance due to macroeconomic trends affecting the livestock business, as noted by Nasdaq analysts.
Still, Zoetis maintains what many analysts consider a dominant competitive position in animal health, bolstered by a diverse portfolio and innovation pipeline. The company has consistently expressed full confidence in the safety and efficacy of Librela and Solensia, stating that reported adverse event rates remain low relative to the millions of doses distributed globally. However, pet owner groups and legal professionals continue to demand stronger action, alleging inadequate disclosure of risks to veterinarians.
Looking ahead, investors will focus on whether Zoetis can stabilize its companion animal business and reignite growth in its mAb franchise while maintaining momentum in international markets. The company's ability to navigate safety concerns around its flagship products while executing on its 2026 guidance will be critical in determining whether the stock can recover from a decline that has seen shares fall more than 24% year-to-date.
With a market capitalization of $56.8 billion and a forward price-to-earnings ratio of 19.34, Zoetis trades at a premium to the broader market, reflecting expectations that its dominant position in animal health and robust pipeline will eventually overcome current headwinds. Whether that premium is justified will depend largely on the company's execution in the coming quarters.