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Back of Napkin

Zoetis Inc. ZTS

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Zoetis has lost half its market value, from $157.21 to $77.17, while reported earnings per share went from $1.63 to $1.65.

The explanation is one product family: dermatology revenue fell from $472M a quarter to $349M, and a lawsuit filed in May alleges the company misled investors about a different drug's safety.

ZTS · price with moving averages

Daily · 6MWeekly · 3Y
$63$99$136$172$209 Sep '23Apr '24Nov '24Jun '25Jan '26Aug '26 BID
EMAs82140

Source: market data.

The business

Zoetis makes medicines and vaccines for animals, split between companion animals, meaning dogs, cats and horses, and livestock. The companion side is the valuable half because pet owners pay out of pocket and rarely economise on a suffering dog. The franchises that matter are Apoquel and Cytopoint for itchy skin, Simparica Trio for parasites, and Librela and Solensia, injectable antibodies for arthritis pain.

Vets are the channel. A drug only sells if the practice stocks it and recommends it, which makes veterinary sentiment the distribution system and the vulnerability.

Inside the complete Back of Napkin

  1. 01The business
  2. 02The numbers
  3. 03Management
  4. 04How it fails or surprises you
  5. 05The shape of the payoff
  6. 06Closing thoughts
  7. 07Methodology

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