ZTS

Impax Asset Management, based in London and specializing in sustainable investing, released its Q2 2026 investor letter for the “Impax US Sustainable Economy Fund”. The letter can be downloaded here. The US Sustainable Economy portfolio outperformed the Russell 1000 in Q2 2026, with Institutional Class at 17.96%, Investor Class at 17.95%, and Class A at 17.92%, versus the index's 15.14%. Sector allocation and stock selection drove performance. The sustainability tools, including the Impax Sustainability Lens and Corporate Resilience framework, contributed positively. Equity markets rallied, with both the S&P 500 and Nasdaq reaching new highs before retreating. A key trend was rotation into AI and tech stocks, supported by mega-cap earnings and data center investments (US$750bn to US$1tn). In the second half of 2026, markets may remain volatile amid debates on AI adoption pace and economic momentum. However, growth tied to energy security and efficiency remains compelling, with demand for power, grid, and resource-efficient solutions supporting companies that benefit. The team focuses on businesses with strong growth, sound management, and attractive valuations, adjusting holdings as needed. This approach aims to build well-diversified, differentiated portfolios. Also, please check the fund’s top five holdings for its best picks in 2026. In its second-quarter 2026 investor letter, Impax US Sustainable Economy Fund highlighted Zoetis Inc. (NYSE:ZTS). Zoetis Inc. (NYSE:ZTS), an animal health company focused on animal health medications, vaccines, and diagnostic products, detracted from the Fund’s performance during the quarter. On September 04, 2026, Zoetis Inc. (NYSE:ZTS) closed at $75.81 per share. Over the past month, Zoetis Inc. (NYSE:ZTS) returned 1.31%, but its shares are down 50.04% over the past year. Zoetis Inc. (NYSE:ZTS) has a market capitalization of $31.33 billion. Impax US Sustainable Economy Fund stated the following regarding Zoetis Inc. (NYSE:ZTS) in its Q2 2026 investor letter: Zoetis Inc. (NYSE:ZTS) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. According to our database, 64 hedge fund portfolios held Zoetis Inc. (NYSE:ZTS) at the end of the second quarter, up from 57 in the previous quarter. While we acknowledge the potential of Zoetis Inc. (NYSE:ZTS) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. In another article, we covered Zoetis Inc. (NYSE:ZTS) and noted the impact of emergency authorization for Simparica Trio, a new veterinary drug, comes at a crucial time when the company is facing challenges. In addition, please check out our hedge fund investor letters Q2 2026 page for more investor letters from hedge funds and other leading investors. READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years. This article is originally published at Insider Monkey.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Record net sales of $1.5 billion were driven by the successful integration of the Zoetis MFA portfolio and strong momentum in legacy Animal Health and Mineral Nutrition segments. The Animal Health segment remains the primary growth engine, benefiting from a diverse portfolio across species and the strategic rotation of anticoccidial molecules. Mineral Nutrition saw significant revenue growth of 20% in Q4, though EBITDA growth was tempered by the inability to fully pass through rising commodity costs for zinc and copper. The formal conclusion of the 'Phibro Forward' transformation program has embedded stronger execution discipline and accountability into the company's permanent operating model. Management attributed the Q4 decline in the acquired MFA portfolio to a difficult year-over-year comparison rather than any negative underlying demand trends. The planned closure of the Chicago Heights facility reflects a strategic decision to align the manufacturing footprint with future needs and improve long-term asset efficiency. Fiscal 2027 guidance assumes a prudent stance on the regulatory status of virginiamycin in Brazil, including only minimal sales to account for potential political delays. The 'Phibro Forward' initiative is expected to reach a cumulative EBITDA contribution of approximately $50 million in fiscal 2027 compared to the 2024 baseline. Management expects significantly greater free cash flow in fiscal 2027 as inventory builds stabilize following the massive $86 million investment in fiscal 2026. Capital expenditures are projected to rise in fiscal 2027 and 2028 to expand vaccine manufacturing capacity in Ireland and Israel to meet growing global demand. The Chicago Heights closure is expected to deliver annual EBITDA benefits of $15 million to $20 million starting primarily in fiscal 2028. The closure of the Chicago Heights manufacturing site will result in approximately $10 million in cash closure costs and $10 million in related capital expenditures. Regulatory uncertainty regarding virginiamycin therapeutic claims in Brazil serves as a primary headwind, though management remains optimistic about a long-term favorable outcome. Inventory growth in fiscal 2027 will be significantly lower than the prior year, primarily limited to the transition needs of the Chicago Heights facility closure. A one-time tariff recovery in the fourth quarter provided a temporary boost to Animal Health adjusted EBITDA. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management expects the acquired portfolio to outpace overall company revenue growth in fiscal 2027 despite the Q4 dip. Growth will be driven by strong North American momentum and the 'Start Strong' package repositioning cattle products for feedlots. The issue is currently a 'political football' due to upcoming elections and EU export regulations regarding antibiotic use. Management is cautiously optimistic about receiving therapeutic use approvals within the 180-day transition period ending in October. Organic growth remains the top priority, followed by targeted M&A in vaccines, environmental, and companion animal sectors. The company intends to maintain its dividend and continue paying down debt as gross leverage has fallen below 3x. Rejensa is seeing an uptick due to expanded distribution, while Restoris reorders are growing despite slower-than-anticipated initial adoption. Management has tempered expectations for the companion animal segment in the fiscal 2027 guidance while remaining confident in the long-term proposition.

Interested in Phibro Animal Health Corporation? Here are five stocks we like better. Record fiscal 2026 results: Phibro Animal Health reported sales of $1.518 billion, up 17%, while adjusted EBITDA rose 39% to $255 million. Growth was led by Animal Health and the integration of the acquired Zoetis medicated feed additive portfolio. Fiscal 2027 outlook includes Brazil uncertainty: The company expects sales of $1.55 billion to $1.60 billion and adjusted EBITDA of $258 million to $268 million, assuming minimal second-half Brazilian virginiamycin sales due to regulatory and political uncertainty. Efficiency and restructuring initiatives continue: Phibro completed its Phibro Forward program and plans to close its Chicago Heights facility, with expected annual adjusted EBITDA benefits of $15 million to $20 million beginning in fiscal 2028, partly offset by near-term closure costs and capital spending. Phibro Animal Health (NASDAQ:PAHC) reported record fiscal 2026 sales and a sharp increase in adjusted EBITDA, supported by growth in its Animal Health and Mineral Nutrition businesses, the integration of its acquired Zoetis medicated feed additive portfolio, and operational initiatives under its Phibro Forward program. For the fiscal year ended June 30, 2026, Phibro posted net sales of $1.518 billion, up $221.9 million, or 17%, from the prior year. Adjusted EBITDA rose $71.3 million, or 39%, to $255 million, according to Chief Financial Officer Glenn David. Chief Executive Officer Daniel Bendheim said the company’s results reflected improved execution, efficiency and positioning for long-term growth. → Quantum Computing Is Raising the Stakes for Cybersecurity: 5 Stocks to Watch Fourth-quarter sales increased 5% to $396.7 million, while adjusted EBITDA grew 29% from the prior-year period. GAAP net income and diluted earnings per share increased 26% in the quarter, David said, citing integration of the acquired MFA business, stronger demand, favorable sales mix, lower input costs and tariff recoveries. Those factors were partly offset by higher employee-related selling, general and administrative expenses. The Animal Health segment generated $1.162 billion in fiscal-year sales, an increase of $199.4 million, or 21%. Segment adjusted EBITDA rose 37% to $303.6 million. → NVIDIA Reveals $21 Billion SpaceX Stake: Signal of Confidence or Circular Financing? Within the segment, the acquired MFA portfolio contributed $354.3 million in annual revenue, up 70% from the prior year. In the fourth quarter, however, sales from the acquired portfolio declined 11% to $83.9 million, which management attributed to a difficult comparison with a strong fourth quarter in fiscal 2025 rather than a deterioration in underlying trends. David said Phibro expects the acquired MFA portfolio to outpace companywide revenue growth in fiscal 2027, supported by continued momentum in North America, international growth opportunities and the absence of prior-year returns associated with certain market transitions. → Berkshire Boosts Its Bet: This AI Hyperscaler Is Now a Top-3 Holding Legacy Animal Health sales also advanced. For the full year, legacy MFA and other revenue increased 4%, Nutritional Specialties sales rose 9%, and vaccine revenue grew 14%. Vaccine growth was driven by poultry products in Latin America and demand in Israel and Southeast Asia, while Nutritional Specialties benefited from worldwide demand and higher companion-animal sales. Chief Operating Officer Larry Miller said the company is using the acquired poultry MFA products alongside its legacy nutrition and vaccine offerings. In cattle, Phibro is positioning certain acquired products through its “Start Strong” package for feedlots, combining Bovatec, Deccox and Aureomycin offerings. Management said fiscal 2027 guidance assumes minimal sales of virginiamycin in Brazil because of uncertainty around therapeutic-use approvals. Phibro recorded approximately $27 million in Brazil sales of virginiamycin during fiscal 2026. Miller said the company continues to work with Brazilian regulators and remains optimistic about obtaining therapeutic-use approvals. The company expects the 180-day transition period to end in late October, but Bendheim said the political environment surrounding upcoming elections could delay the process. As a result, Phibro did not include sales beyond the first quarter in its fiscal 2027 assumptions. “A favorable outcome will represent upside to our expectations rather than something required to achieve our outlook,” Bendheim said during the call. Mineral Nutrition revenue increased 20% in the fourth quarter to $77 million and rose 11% for the year to $282.3 million. The growth reflected demand for premixes, copper, zinc and other trace minerals, as well as higher underlying commodity costs. However, segment adjusted EBITDA rose only 1% in the fourth quarter and 4% for the full year, as elevated input costs limited profitability. Bendheim said the company expects Mineral Nutrition to produce stronger EBITDA growth in fiscal 2027 despite potentially slower revenue growth. Performance Products revenue declined 8% for the full year to $73.5 million, primarily because of lower demand for ingredients used in personal care products. Full-year adjusted EBITDA in the segment fell $2.5 million to $8.1 million. Phibro formally concluded its three-year Phibro Forward transformation program in June. Bendheim said the operating discipline and accountability developed through the initiative will remain embedded in the organization. The company expects cumulative EBITDA contributions from the program to reach about $50 million in fiscal 2027 compared with its fiscal 2024 baseline. The company also announced plans to close its Chicago Heights manufacturing facility following a review of the manufacturing network added through the MFA acquisition. David said the closure is expected to provide a small adjusted EBITDA benefit in fiscal 2027, with annual benefits of roughly $15 million to $20 million expected beginning in fiscal 2028. Phibro expects about $10 million in one-time cash costs and approximately $10 million in capital expenditures related to the closure, though additional noncash costs remain undetermined. For fiscal 2027, Phibro guided for net sales of $1.55 billion to $1.60 billion, representing 2% to 5% growth. The company expects adjusted EBITDA of $258 million to $268 million, adjusted net income of $140 million to $147 million, and an adjusted effective tax rate of about 20%. Fiscal 2026 operating cash flow was $69 million. Capital expenditures totaled $59 million, producing $10 million of free cash flow. Inventory increased $86.3 million during the year, primarily related to the acquired MFA portfolio. Year-end cash, cash equivalents and short-term investments totaled $82 million. Gross leverage stood at 2.9 times, while net leverage was 2.6 times. David said fiscal 2027 inventory growth should be substantially below fiscal 2026 levels, though the company expects a $25 million to $30 million inventory build associated with the Chicago Heights transition. Capital spending is expected to increase as Phibro expands vaccine capacity in Ireland and Israel and shifts production from the Illinois facility. The company paid a quarterly dividend of $0.12 per share, or $4.9 million in aggregate. Phibro Animal Health Corporation (NASDAQ: PAHC) is a diversified global animal health and mineral nutrition company headquartered in Teaneck, New Jersey. The company develops, manufactures and markets a broad range of pharmaceutical, mineral nutrition and performance products designed to support the health and productivity of livestock, companion animals and aquaculture species. Phibro's portfolio includes vaccines, anti-infective therapies, coccidiostats, disinfectants, premix minerals and specialty feed additives aimed at enhancing growth, immunity and overall animal well-being. The company operates through three principal business segments: Animal Health, Mineral Nutrition and Performance Products. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Phibro Animal Health Q4 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Zoetis Inc. (NYSE:ZTS) entered 2026 as a leader in animal health, but its latest earnings show that even a strong market position cannot fully insulate the company from weaker consumer demand. Fiscal Q2 2026 revenue remained flat at $2.5 billion and declined 1% on an organic operational basis, as pressure in the U.S. companion-animal market offset growth in livestock and international markets. The quarter therefore presents investors with two different versions of Zoetis (NYSE:ZTS), as an established companion-animal business facing near-term pressure and a diversified animal-health platform still investing in its next generation of products. Zoetis’s (NYSE:ZTS) diversification provided an important source of resilience during the quarter. Livestock revenue increased 12% on a reported basis, supported by cattle and poultry products. In the United States, livestock sales grew 23% on both a reported and organic operational basis in the quarter, benefiting from favorable beef-cattle economics, supply timing, and increased poultry-vaccine sales associated with disease outbreaks. International performance was also encouraging. Revenue outside the United States rose 8% on a reported basis and 6% organically to $1.2 billion. International companion-animal sales grew 5% organically, supported by parasiticides such as Simparica Trio, Revolution and Stronghold, as well as diagnostics and newer osteoarthritis treatments. This geographic contrast demonstrates that the weakness was not uniform across Zoetis’s (NYSE:ZTS) business. Demand for its products remains healthy in several markets, even as U.S. pet owners become more price-sensitive. However, innovation could provide another route back to growth, as Zoetis (NYSE:ZTS) says that its pipeline contains more than 12 potential blockbuster candidates across chronic kidney disease, oncology, cardiology, anxiety, and obesity. The company also launched Lenivia and Portela, long-acting osteoarthritis treatments offering dogs and cats up to three months of pain relief from one injection. Zoetis (NYSE:ZTS) is expanding beyond medicines as well. Its acquisition of VitalRADS adds a veterinary teleradiology platform to its diagnostics business, potentially broadening the company’s role in veterinary care and creating an additional source of longer-term growth. The most significant concern is the deterioration of Zoetis’s (NYSE:ZTS) core U.S. companion-animal business. U.S. segment revenue declined 7%, while companion-animal product sales fell 11%. Management attributed the weakness to lower veterinary-clinic visits, pet-owner price sensitivity, and intensified competition. Several important franchises were also affected. Zoetis (NYSE:ZTS) reported pressure on its dermatology portfolio and Simparica Trio, generic competition for Cerenia and Convenia, and lower Librela sales. This combination suggests the slowdown extends beyond a single product and reflects both economic and competitive challenges. The reduction in full-year guidance makes the risks more difficult to dismiss as temporary quarterly volatility. Zoetis (NYSE:ZTS) lowered its 2026 revenue forecast from $9.68–$9.96 billion to $9.12–$9.32 billion. It now expects organic operational revenue to decline between 1% and 3%, compared with its previous expectation of 2%–5% growth. Adjusted diluted EPS guidance was also cut from $6.85–$7.00 to $6.15–$6.25, while projected organic adjusted net-income growth moved from positive 2%–6% to a decline of 5%–9%. The scale of these revisions indicates that management expects the pressure to persist beyond one quarter. Zoetis (NYSE:ZTS) still possesses valuable advantages, which include a diversified animal-health portfolio, international reach, and a pipeline targeting several potentially significant markets. Livestock and international growth demonstrate that important parts of the business remain healthy. Nevertheless, the investment case shows some near-term headwinds. Declining U.S. companion-animal sales and substantially reduced guidance show that Zoetis (NYSE:ZTS) must adapt to softer demand while defending key franchises from competition. Its pipeline offers credible long-term potential, but investors will need evidence that new products can restore growth before treating the latest weakness as a temporary setback. While we acknowledge the potential of ZTS as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

Zoetis delivered flat revenue in Q2, missing Wall Street expectations, while its adjusted earnings per share slightly exceeded consensus. The market’s positive reaction was underpinned by management’s acknowledgment of intensifying competitive pressures in key Companion Animal categories and ongoing declines in U.S. veterinary clinic visits. CEO Kristin Peck noted, “Veterinary clinic visits declined across markets, extending a multiyear trend that has occurred alongside price increases that have outpaced broader consumer inflation.” The company highlighted resilience in its Livestock and Diagnostics segments, despite softness within dermatology and parasiticides. Is now the time to buy ZTS? Find out in our full research report (it’s free). Revenue: $2.47 billion vs analyst estimates of $2.50 billion (flat year on year, 1.5% miss) Adjusted EPS: $1.87 vs analyst estimates of $1.85 (1% beat) The company dropped its revenue guidance for the full year to $9.22 billion at the midpoint from $9.82 billion, a 6.1% decrease Management lowered its full-year Adjusted EPS guidance to $6.20 at the midpoint, a 10.5% decrease Operating Margin: 37.4%, down from 39.1% in the same quarter last year Market Capitalization: $30.39 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Erin Wilson Wright (Morgan Stanley) asked about the timing and impact of targeted price actions and how much conservatism was embedded in the updated guidance for U.S. Companion Animal. CEO Kristin Peck clarified that Zoetis is emphasizing temporary, targeted gross-to-net investments rather than permanent list price changes to protect share. Brandon Vazquez (William Blair) sought clarification on gross-to-net pricing strategies and the margin implications for the second half. Peck explained these are deliberate, time-bound actions focused on volume and share, while CFO Wetteny Joseph highlighted FX headwinds as another factor in the revised outlook. Michael Ryskin (Bank of America) inquired about the extent of cost controls and SG&A reductions, and whether competitive pressures would persist into next year. Joseph noted that cost actions are already benefiting margins, while Peck suggested that competitive intensity may continue into 2027, with a focus on defending differentiated products. David Westenberg (Piper Sandler) questioned how much Q2 weakness was due to market contraction versus competition, and whether rebate strategies were sustainable given contract structures. Joseph responded that both macro and competitive factors were meaningful, while Peck noted contract durations vary but promotional flexibility remains key. Christopher Schott (JPMorgan) asked about the duration of price promotions and what would trigger a reduction. Peck said promotions would be dialed back if share stabilizes, and that the company is closely monitoring competitive and macro factors in each product category. In the coming quarters, our analysts will closely watch (1) stabilization or recovery in U.S. veterinary clinic visits and premium therapy demand, (2) the pace of new product launches in dermatology and diagnostics, and (3) the effectiveness of leadership changes in driving commercial execution. Additionally, the StockStory team will monitor ongoing cost discipline efforts and the competitive landscape for signs of easing promotional activity. Zoetis currently trades at $73.72, in line with $74.39 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free for active Edge members). WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses. But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.

Image source: The Motley Fool. Thursday, Aug. 13, 2026 at 8:30 a.m. ET Vice President of Investor Relations - Steve Frank Chief Executive Officer - Kristin Peck Chief Financial Officer - Wetteny Joseph Operator: Welcome to the Second Quarter 2026 Financial Results Conference Call and Webcast for Zoetis. Hosting the call today is Steve Frank, Vice President of Investor Relations for Zoetis. The presentation materials and additional financial tables are currently posted on the Investor Relations section of zoetis.com. The presentation slides can be managed by you, the viewer, and will not be forwarded automatically. In addition, a replay of this call will be available approximately 2 hours after the conclusion of this call via dial-in or on the Investor Relations section of zoetis.com. [Operator Instructions] The floor will be open for you questions following the presentation. [Operator Instructions] It is now my pleasure to turn the call over to Steve Frank. Steve, you may begin. Steven Frank: Thank you, operator. Good morning, everyone, and welcome to the Zoetis Second Quarter 2026 Earnings Call. I am joined today by Kristin Peck, Chief Executive Officer, and Wetteny Joseph, Chief Financial Officer. This morning, we issued a press release announcing our financial results. Before we begin, I would like to remind you that the release and corresponding earnings presentation, which we will reference during this call, are available on the Investor Relations section of our website and that many of our statements today may be considered forward-looking statements and that actual results could differ materially from those projections. For a list and description of certain factors that could cause results to differ, I refer you to the forward-looking statements in today's press release and in our company's Exchange Act reports filed with the SEC. Additionally, today's remarks will include certain non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable U.S. GAAP measures can be found in the earnings press release and our company's 8-K filing dated today, August 6, 2026. We will also reference reported and organic operational growth. Organic operational growth excludes the effect of foreign currency as well as acquisitions and divestitures, which individually impact Zoetis' growth by 1% or less. Unless otherwise stated, all revenue growth performance metrics will be based on organic operational performance. With that, I will turn the call over to Kristin. Kristin Peck: Thank you, Steve. Good morning, everyone, and thank you for joining us today. I will start with the operating environment because it's important context for both our performance and the actions we're taking. As we have discussed in prior quarters, the Companion Animal market is being shaped by several interconnected forces. Those dynamics continued in the second quarter and in some areas, intensified. Veterinary clinic visits declined across markets, extending a multiyear trend that has occurred alongside price increases that have outpaced broader consumer inflation. As a result, pet owners have become more selective in how they spend, which is showing up in visitation patterns and purchasing decisions. In parallel, clinic revenue has increasingly shifted toward urgent and emergency care, while premium preventative and chronic care remain under pressure. These are broad pet care market dynamics and not unique to Zoetis, but they matter more for us because of where we lead. Competitive intensity has increased, and many of the categories facing the greatest pressure are categories Zoetis pioneered or helped establish as standards of care. Historically, when more companies invest behind a therapeutic category, that activity helps expand the market by increasing disease awareness, deepening veterinary engagement, and educating pet owners. This is not what we are seeing today. Instead, in a slower growth market, the nature of competition has changed. New entrants are using higher levels of discounting, rebates, cross-portfolio bundling, and other incentives to compete for existing patients. And overall, these headwinds have created near-term pressure. At the same time, the level of competitive activity reinforces the enduring attractiveness of the categories Zoetis has helped shape over many years. Our ability to maintain leadership positions even amid simultaneous competitive launches gives us confidence in the actions we are taking to strengthen our near-term position and create the right foundation for growth over time. With that, I will turn to our second quarter performance, which reflects these dynamics and fell short of our expectations. On an organic operational basis, revenue and adjusted net income declined 1% and 2%, respectively. By segment, revenue grew 6% internationally, supported by broad-based growth in emerging markets, while the U.S. declined 7%. Our diversified portfolio continued to provide resilience with livestock delivering another quarter of strong 11% revenue growth. However, that strength was more than offset by continued pressure across key parts of our Companion Animal portfolio, which declined 6% in the quarter. Looking ahead, we have updated the outlook for the year to reflect our first half results and the headwinds we expect to continue in the near term. We are moving with urgency as we navigate the current environment. Throughout today's call, you'll hear me discuss the actions we are taking to maintain our leadership and drive growth. We are focused on sharpening commercial execution, strengthening our competitive position, exercising greater cost discipline, and continuing to invest in the innovation that we believe will define the next chapter of growth for Zoetis. We are also evolving our leadership team to more closely align with our talent and organizational structure with the execution of these initiatives. In June, we promoted Abhay Nayak to EVP and President of our U.S. Commercial Operations. Abhay previously led our Global Diagnostics Division and demonstrated that he is a high-impact leader who can drive strong revenue growth while also advancing innovation and building out key capabilities. Now in his new role, Abhay is laser-focused on driving stronger performance and accountability in our U.S. commercial operations. As we announced today alongside our earnings report, Jay Saccaro will also be joining Zoetis as our EVP, Chief Financial Officer and Chief Operating Officer. This is a newly created role that will give Jay broad oversight of all finance functions as well as global manufacturing and supply. We are in an important moment that requires speed and agility, and this change is all about enabling faster decision-making, greater connectivity across the supply chain, and accelerated turnarounds from strategic planning to execution. We are confident that we found the right leader with the right background to step into this new role. Jay possesses the unique combination of skills we are seeking. He comes to Zoetis with an impressive background in life sciences, having served as CFO of both GE Healthcare and Baxter. He also has a track record of designing and executing strategies that balance investments in innovations with operational rigor. I look forward to partnering closely with Jay, and I know he's eager to get started in a few weeks on August 17. And I want to take a moment to express my sincere gratitude to Wetteny. Wetteny has been a valued partner to me at every turn over the past 5 years. I know I speak for the Board and everyone at Zoetis when I thank him for his strong leadership and many important contributions, and we wish him all the best in his next chapter. With that, let's dive deeper into each of our key franchises. I will start with our key Dermatology franchise, where the broader Companion Animal pressures are most visible. The dynamics affecting this franchise remained largely consistent with what we described last quarter, but the pace and intensity of pressure increased in the second quarter and continued to weigh on top-line growth. In Q2, the category itself continued to soften. In the U.S., for example, canine pruritic clinic visits remained down more than 2% in the second quarter. Historically, growth in alternative channels, particularly for Apoquel, helped offset softer clinic traffic. But in the current environment, growth in those channels also moderated, reflecting broader end-market softness across the category. At the same time, competitive activity intensified globally with new entrants using higher levels of launch-related promotional incentives to establish share. This resulted in continued share pressure, especially in a market that is not expanding. Given the market size and intensity, our strategy is clear: compete with discipline, reinforce the differentiated value of our portfolio, and direct incremental sales and marketing dollars where they can have the greatest impact, protecting share, influencing demand, and driving conversion. This is how we manage the portfolio, focusing resources where the need is immediate while continuing to support our broader Companion Animal priorities with discipline. Targeted pricing and affordability actions are also being deployed where appropriate, helping us stay competitive in the near term while preserving the value of our franchise. And innovation remains central to the strategy. The anticipated U.S. approval of long-acting Cytopoint later this year would strengthen our Dermatology portfolio with another differentiated option, helping veterinarians deliver effective care with greater convenience and value for pet owners. In parasiticides, the Simparica franchise was flat in the quarter with double-digit international growth, offset by continued pressure in the U.S. The dynamics vary by market, but the common thread is that affordability, channel behavior, and promotional activity are playing a larger role in purchase decisions for pet owners and veterinarians. Internationally, the franchise benefited from increased usage as well as the continued launch of Simparica Trio in Brazil, reinforcing the relevance of triple combination protection in markets where adoption is still building. In the U.S., franchise performance was pressured by continued clinic dynamics, including declines in flea, tick, and heartworm visits as well as a more competitive and promotional environment. Unlike in prior periods, growth in retail was not enough to offset. We are taking targeted actions to stabilize performance, including more competitive pricing, enhanced pet owner promotions, and competitive capture where we see the greatest opportunity to protect and grow volume. Elsewhere, in our small animal paras portfolio, we benefited from the breadth and diversity of our offerings with Revolution growing on increased feline visits, highlighting the value of having multiple ways to drive essential preventative care in dogs and cats. Turning to Canine OA pain. Revenue declined in the quarter against a strong comparison. While we saw both year-over-year and sequential growth internationally with contributions from Lenivia, U.S. performance remained under pressure with canine pain-related visits declining more than 2% in the quarter. For Canine OA pain, medical affairs remains one of the most important levers for category development. This is a market where specialist engagement and scientific education are essential to strengthening veterinarian confidence and expanding use. With Librela and the early wave of market approvals for long-acting Lenivia, including most recently in Great Britain and Switzerland, we are giving vets greater flexibility and convenience. Encouraging early experience is driving the acceleration of Lenivia launches in Canada and Europe, reinforcing our conviction in the long-term opportunity and belief that this expanded portfolio can help bring the category back to growth over time. Separately, Feline OA pain grew in the quarter, demonstrating continued traction in a category that remains early in its development. The context here is important. While overall clinic visits remain pressured, feline visits were a positive outlier in the quarter, and recent industry research points to a more durable feline opportunity with [indiscernible] cohorts remaining above pre-pandemic baseline. At the same time, cats remain historically under-medicalized with a meaningful gap between the number of cats in households and the number receiving regular veterinary care. That gap is especially relevant in OA pain, where the condition remains underdiagnosed and undertreated. Since the launch of Solensia, we have seen how innovation could help begin to close that gap, expanding feline clinic visits and giving vets a new reason to engage cat owners. Portela builds on that progress. With a 3-month long-acting profile, its launch in Canada and the EU provides veterinarians a broader set of options and greater convenience in treating feline OA pain. Early feedback has been encouraging, reinforcing our confidence this expanded portfolio can help build the category over time and support continued medicalization. Turning to Companion Animal Diagnostics. Revenue grew 12% in the quarter, reflecting sustained demand for diagnostic tools and services, particularly in urgent and emergency care. During the quarter, we expanded the capabilities of Vetscan OptiCell, further strengthening our point-of-care diagnostic offering. We also completed the acquisition of VitalRADS, a veterinary teleradiology services platform, which will extend our capabilities beyond in vitro testing and into veterinary imaging interpretation, supporting our vision of a more complete end-to-end virtual reference lab. Together, these developments reinforce why diagnostics is an important catalyst for Zoetis and a clear example of how we are deepening our customer relationships. Our platforms strengthen veterinary workflows, increase our daily relevance in the clinic, and help veterinarians move from diagnostic insight to treatment decisions faster. And as earlier detection becomes increasingly important, our diagnostics capabilities can support adoption, reinforce standards of care, and create a stronger launch pathway for our pipeline. We are also continuing to advance our Diagnostics pipeline with Vetscan OmniMax, our new multimodal chemistry platform and one of our potential blockbuster opportunities with commercial validation still expected by year-end. In Livestock, we delivered strong 11% growth in the quarter with an especially strong contribution from the U.S. Performance was led by cattle and poultry, reflecting continued demand for our broad portfolio of medicines and vaccines that help producers protect animal health, improve productivity, and manage evolving disease threats. In cattle, increased demand for Dectomax related to New World screwworm incursion underscores the role Zoetis plays as a trusted partner when veterinarians and producers need effective tools quickly. Poultry also contributed meaningfully with growth driven primarily by vaccines in key markets, supported by our hatchery programs, new contracts, and tender wins. I also want to highlight the broad-based strength we saw in emerging markets with contributions across Livestock, Companion Animal, and Diagnostics. That performance reflects the value of our global footprint and ability to capture demand across a diverse set of markets. Stepping back, these results reinforce 2 important points. First, the near-term pressures affecting parts of our Companion Animal and our full year outlook; and second, the value of our diversified portfolio to provide balance. That combination is why we are staying disciplined on costs, targeted in commercial investment, and focused on advancing the innovation that it can expand markets over time. With that context, we are revising our full year outlook to reflect the market conditions we expect to persist in the near term and the actions we are taking in response. Since our last call, pressure in parts of our Companion Animal portfolio has been more pronounced than our prior outlook assumed as reflected in our Q2 results, which fell below our expectation. The change is driven primarily by continued clinic visit declines, more value-conscious pet owner behavior, and elevated promotional activity in key categories, particularly Dermatology and U.S. parasiticides. We now expect organic operational revenue growth to decline 3% to 1% and organic operational growth to decline 9% to 5% in adjusted net income. Even as we navigate near-term pressure, we are confident in the long-term fundamentals and in our ability to lead through the cycle by defending leadership positions, investing behind the highest return opportunities, and continuing to build the next wave of innovation. Before I close, I want to recognize our colleagues around the world whose focus and commitment to customers are critical to delivering against our priorities and close with how we are thinking about the path forward. We are operating in a more competitive and value-conscious environment than we have seen in recent years, and we are not assuming the market gets easier. We are adapting to the market in front of us. We are responding with focus and discipline, sharpening execution in Companion Animal, allocating capital with discipline, exercising greater cost discipline, and continuing to advance the innovation that has always differentiated Zoetis. At the same time, the longer-term fundamentals of animal health remain strong. Our current portfolio gives us scale and resilience. Our pipeline with 12 potential blockbusters over the next several years creates meaningful opportunity to shape standards of care and create new markets. We're also investing in the ecosystem around animal health. Our latest sustainability report highlights the completion of the Driven to Care aspirations we set in 2021 and our continued investment in the resilience of veterinary health care teams around the world because leading in animal health is not only about the products we bring to market, it's about strengthening the system of care. Zoetis has built leading categories before. We know how to defend them, evolve them, and build what comes next. So while we are realistic about the near-term environment reflected in our updated guidance, we remain confident in the long-term strength of our business and our ability to lead animal health into the next chapter. Wetteny will walk through our financial results in a moment. But before I hand it over, I want to say thank you again. We appreciate everything he's done over the last 5 years and his commitment to ensuring a smooth transition. So with that, Wetteny? Wetteny Joseph: Thank you for the kind words, Kristin. Zoetis is a remarkable company with a strong foundation, talented people, and a bright future ahead. It has been a privilege to serve as CFO for the past 5 years. As Kristin noted, I remain as a special adviser on financial matters until early 2027 to help ensure a smooth transition for all. I look forward to watching Zoetis' success for years to come. I know great things lie ahead for this team. With that, let me turn to our financial results for the second quarter. Second quarter global revenue was $2.5 billion, flat on a reported basis and down 1% on an organic operational basis, driven by a 1% decline in volume with price approximately flat. In response to competitive conditions, we took select targeted actions across various franchises, ggross-to-net investments in Dermatology, and price adjustments on Cerenia and Convenia in the U.S. in response to generic competition. These actions weighed on near-term price realization in the quarter as well as on the full year expectations in our revised guidance, but they are deliberate and targeted steps to protect volume, defend share, and support long-term franchise health. Adjusted net income was $781 million, down 2% on an organic operational basis. Importantly, we continue to demonstrate strong P&L discipline, protecting profitability through cost actions while staying focused on the investment behind our highest-return opportunities. Our Global Companion Animal revenue was $1.7 billion, down 6% in the quarter. Key Dermatology was $395 million, down 16%. The category remained affected by softer demand, including lower pruritic visits in the U.S. alongside elevated competitive activity. We have begun taking actions grounded in competing with discipline, reinforcing the differentiated value of our portfolio, and focusing resources where they most effectively protect share and support demand. OA pain mAbs delivered $147 million, down 3% globally. Canine OA pain mAbs, which consists of the combined sales of Librela and Lenvia, delivered $105 million, down 8%. Feline OA pain mAbs consisting of Solensia and Portela delivered $42 million, up 12%. We saw early contributions from Lenvia and Portela in the EU and Canada, and we were encouraged by the initial experience program as we broaden the OA pain portfolio internationally. We recently announced full launch in those markets and continue to expect expansion into other markets in the coming year. Simparica franchise was $442 million, flat globally. Simparica Trio posted $350 million, down 1%, while Simparica posted $91 million, up 4%. Internationally, the franchise delivered strong growth driven by Simparica Trio's continued market share gains and broad-based Simparica performance across most markets, while in the U.S., softer end-market demand and a more competitive environment weighed on both price and volume. We also continue to see generic headwinds on Cerenia and Convenia in the U.S., and we have adjusted pricing accordingly. Companion Animal Diagnostics delivered $118 million, up 12%. Growth was driven by the continued adoption of innovative diagnostic technologies, including Vetscan Imagyst and OptiCell. This business continues to perform well and reinforces the value of our recent innovation in this space. Livestock delivered $731 million, up 11%, supported by broad-based demand for healthy and affordable protein globally, improved supply, and elevated cattle demand, particularly in the U.S. Now let's move on to our segment results for the quarter. U.S. revenue was $1.3 billion, down 7%. U.S. Companion Animal was $1.0 billion, down 11%. The quarter reflected continued pressure from clinic traffic and affordability dynamics alongside intensifying competition in key franchises. At the same time, we are moving with urgency, sharpening our commercial execution, deploying targeted levers to defend share, and taking the steps necessary to stabilize performance in this environment. U.S. Key Dermatology was $251 million, down 18%. For Apoquel, price has become a more prominent factor in prescribing decisions, while softer pruritic visits have created a more challenging demand environment. Together, these factors have a magnifying effect on the impact of competition. We deployed targeted gross-to-net investments to defend volume and slow share loss, which results in lower realized price in Apoquel. In alternative channels, we faced a tougher comparison from prior year retailer dynamics, but even normalizing for these factors, growth moderated and was not enough to offset clinical declines. Cytopoint's decline in the quarter reflects broader clinic and affordability pressures, creating headwinds for premium therapy adoption broadly across Companion Animal. In the U.S., our Dermatology franchise remains the clear market leader with approximately 86% of in-clinic share in Q2 despite share declining 5 points sequentially and 10 points year-over-year. We continue to see a meaningful pool of untreated and undertreated atopic dogs, and we remain focused on demand generation and new patient adoption over time. U.S. Simparica franchise was $308 million, down 6%, reflecting softer flea, tick, and heartworm visits and a more competitive and promotional environment. Simparica Trio maintained its position as the clear market leader in oral parasiticides, holding in-clinic market share of approximately 21% in Q2, nearly double that of its nearest competitor. Our puppy share of approximately 28% meaningfully outpaced overall share, signaling continued room for expansion even as the broader market declines and competitive pressure intensified. U.S. OA pain mAbs were $51 million, down 18%. Canine OA pain mAbs were $34 million, down 24%, reflecting a high year-over-year comparison, softer clinic visit trends, and the same value-conscious environment that is impacting other premium therapies. Importantly, veterinarian and pet owner satisfaction and confidence in Librela remains high, and the long-term opportunity remains significant. We remain focused on driving patient adoption and access over time as well as broadening our offering with our expected Lenvia approval. Feline OA pain mAbs were $17 million, down 2% as pet owner affordability pressures on premium therapies offset an otherwise encouraging improvement in feline clinic visits in the quarter. Cerenia and Convenia generic competition continued to drive our decline this quarter. Our pricing actions are beginning to support dose recapture, albeit at a lower price point. U.S. Livestock was $222 million, up 23%, reflecting industry dynamics as well as the strength of our portfolio and the durability of underlying demand across the business. Performance was driven by broad-based strength in cattle, supported by favorable producer economics, improved product supply, and elevated demand for parasiticides in response to the New World screwworm outbreak, a combination that resulted in a particularly strong quarter. We do expect second half growth to moderate from Q2's pace to the mid-single-digit range as several of the dynamics that contributed to Q2's outperformance are transitory. Overall, the fundamentals of our U.S. Livestock business remained solid, and we remain confident in the long-term outlook supported by continued strong underlying demand and the breadth of our product portfolio. Turning to international performance. We delivered revenue of $1.2 billion, up 6%. Growth was broad-based across parasiticides, OA pain, diagnostics, and livestock, partially offset by continued pressure in Key Dermatology. International Companion Animal delivered $664 million, up 5%. Developed markets, particularly in Europe, remain more competitive and demand has been uneven. Even in that backdrop, we're holding our ground by staying disciplined on price and promotions and executing market-by-market commercial actions. Emerging markets again provided a meaningful tailwind, supported by continued category development and less competition. International Simparica franchise was $134 million, up 19%. Simparica Trio delivered $67 million, up 34%, reflecting the continued expansion of the triple combination standard of care with broad-based growth driven by market share gains and key account wins. Simparica was $67 million, up 7%, with broad-based demand across regions, reflecting the continued strength of the brand and effective commercial execution, particularly in markets where lower heartworm prevalence drives demand for single-agent protection. Key dermatology was $144 million, down 13%, with the dynamics we described at the segment level playing out most visibly in this franchise. Pressure was most pronounced in developed European markets where competitive penetration has been deepest and the promotional environment most intense. Our approach has been disciplined. We defend share where it matters most, reinforce the differentiated value of our portfolio, and tailor actions market by market to compete effectively while protecting the long-term value of the franchise. International OA pain mAbs was $96 million, up 7% internationally, driven by the early launch contribution of Lenvia and Portela in the EU and Canada, which reflects the broadening of our OA pain franchise internationally. Canine OA pain mAbs delivered $71 million, up 2%, driven by the contributions from Lenvia. We saw some moderation in Librela as patients migrated to the new long-acting formulation, a dynamic we anticipated and one that we view as net positive for the overall franchise. Similarly, our feline OA pain mAbs delivered $24 million, up 24%, driven by the launch of Portela. It is worth noting that the contributions from both Lenvia and Portela this quarter reflect limited early experience launches, making these initial results particularly encouraging as we transition into full launch across the EU and Canada. International Livestock was $509 million, up 6%. Cattle delivered strong growth internationally in the quarter, supported by continued global protein demand and improved product availability across key markets. This strength was partially offset by weaker performance in Brazil, reflecting macroeconomic headwinds and lower medicalization following the end of mandatory foot-and-mouth disease vaccinations. Poultry continued its strong performance, primarily driven by the Middle East and Asia, supported by deeper penetration with key accounts and favorable meat price dynamics. Now let me walk down the P&L. Adjusted gross margin was 72.9%, down approximately 40 basis points on a reported basis. Foreign exchange was an unfavorable impact of roughly 50 basis points. Excluding FX, gross margin increased about 10 basis points, reflecting lower manufacturing costs and productivity, partially offset by unfavorable mix. Adjusted operating expenses were $764 million, down 2% operationally. This reflects continued progress in our comprehensive cost and productivity program and disciplined spend management across the organization while continuing to prioritize investment behind our highest-return growth opportunities and innovation pipeline. Adjusted SG&A was $586 million, down 4% operationally, driven primarily by lower compensation-related expenses and reduced discretionary spend. Adjusted R&D was $173 million, up 4% operationally, driven mainly by timing of project spend. Adjusted net income was $781 million, down 2% on an organic operational basis. Turning to capital deployment. We repurchased over $550 million of shares in the quarter, above our historical quarterly average, excluding the convertible-funded buyback in Q4 of last year. We view this level of buyback activity as a deliberate and attractive use of capital at our current valuation, reflecting our confidence in the long-term strength of the business and our commitment to returning value to shareholders. Benefiting from the lower share count, adjusted diluted EPS was $1.87, up 4% year-over-year. Now turning to our updated guidance for full year 2026. Our outlook reflects the operating environment we see today, particularly in parts of U.S. Companion Animal and the actions we are taking to manage through this period with discipline as well as the strong contribution we have seen from Livestock and Diagnostics and the expectation of continued growth from those businesses. The foreign exchange rates embedded in our guidance are as of late July. We are revising our full year revenue guidance to a range of $9.12 billion to $9.32 billion, representing a decline of 3% to 1% year-over-year on an organic operational basis, reflecting the continued pressure we are seeing across key Companion Animal franchises and ongoing challenges with vet clinic visits and affordability, including our gross-to-net actions to defend share. We are also incorporating sales trends through July, which have not yet indicated market stabilization. The high end of our range assumes contained competitive and pricing pressures in the second half with manageable share losses in Dermatology and parasiticides and continued strength in Livestock and Diagnostics. The low end reflects a scenario where competitive and pricing pressures accelerate with greater Derm and paras share losses, July weakness carrying through the second half, and slower Livestock uptake. We now expect adjusted net income to be in the range of $2.57 billion to $2.62 billion, representing a decline of 9% to 5% year-over-year on an organic operational basis, reflective of the revenue headwinds noted above, partially offset by the cost and productivity actions we are executing across the organization. Finally, we are updating our EPS expectations. We now expect adjusted diluted EPS of $6.15 to $6.25 and reported diluted EPS of $5.55 to $5.65. Overall, this guidance reflects a realistic view of the near term, while we continue to invest behind the pipeline and take the actions needed to strengthen execution and position the business for improved momentum. To close, we're operating in a dynamic environment. Some U.S. Companion Animal categories are facing near-term pressure, while international Livestock and Diagnostics are performing well and demonstrating the resilience of our portfolio. We are focused on what we control, sharpening commercial execution, deploying targeted investments to protect volume and share, and maintaining cost discipline while continuing to advance the innovation that supports long-term growth. With that, I'll turn it back to the operator for your questions. Operator? Operator: [Operator Instructions] We'll take our first question from Erin Wright with Morgan Stanley. Erin Wilson Wright: So I want to talk a little bit about the targeted price actions that you're taking and what's baked into guidance on that front in terms of overall net price realization in the second half? And is this just your primary stabilization lever at this point? And can you talk about some of the timing of those actions? Can you detail kind of the overall dollar share loss you anticipate in Derm and Simparica that's embedded in the guide at this point and the levels of conservatism you have in the guide on the U.S. Companion Animal front and kind of how that changed over the course of the quarter in terms of your thoughts there? And then just a bigger picture question for Kristin. Taking a step back here, and there's been a number of leadership appointments and organizational changes, not just more recently, but over the past several years. And some of the key functions like Head of R&D, COO, Companion, and others. So I guess, how do you think about the balance of organizational stability and then also your continuing effort to evolve the leadership team? And do you feel like now you're at a point where that's largely in place and you can execute on the strategy? Just wanted to hear your thoughts there. Kristin Peck: Thanks, Erin. I think that was many questions on very different topics, but we look forward to taking it. I'll start at the top. You asked about the targeted pricing. As we talked about before, I think the demand for pet care and those structural tailwinds remain where they are and remain strong. I think what we're talking about from a pricing perspective, and we've been really actively going after this for the last few months, is looking not at changing overall list price, as we've talked about, it's focusing on gross-to-net. And we're doing this because we think our real focus is protecting our volume and gaining share. And to do that, if you overall change your list price, that is a permanent structural change versus investing in what we're doing, which is gross-to-net investments, which are really targeted, they're time-bound, and they can demonstrate clear value because really, when you're thinking about these things, it's maintaining your share at a clinic, it's at point of sale with a pet owner, it may be a new start. So our real focus around gross-to-net pricing investments, which you saw us do in the quarter, but we're accelerating as we go through the second half, is really focused on our goal, which is how do we maintain our volume or gain it, how do we focus on protecting or gaining share. And that's why we're focused on those overall pricing sets. As we think about the overall guide, we really focus on looking at the environment that we're operating in, Erin. It's understanding both the macro environment that we're operating in as well as some of the competitive pressures. And I think Wetteny really talked about that. As we looked at the guide right now, we're assuming the persistence of the trends that we've currently seen, both in the softer end-market demand as well as really believing that in this environment, the competitive situation will be people persisting in more promotional activity. And we're going to be aggressive as we think about gross-to-net investments and rebates and pricing and pet owner point of sale to make sure that we protect our volume in a market that may not be growing as fast. As we talk about the leadership question, which you asked me about, overall, I am really excited about the team we have and the team we continue to build. We've had some retirements, obviously, over the last years and some changes. But I'm really focused on ensuring we have the team to focus and be able to deliver in the environment that we have, and that's really been the focus of what we've been doing. So I think that's it. I'm sure we'll get into some of these questions certainly on the guide more as we go through the call. Operator: We'll move next to Brandon Vazquez with William Blair. Brandon Vazquez: Maybe I'll try to do a 2-parter too because one of them is just a clarification on what you had just mentioned, Kristin. But when you're talking about gross-to-net pricing, can you just maybe clarify exactly what that means? There's a lot of questions around the pricing dynamics going on right now. Will Zoetis be realizing a net lower ASP based on that language you're using? What does that mean for margins? And then maybe the broader question I had for you guys is, can you just compare and contrast the updated guidance versus the old guidance? What are maybe the 2 or 3 key items that change within those assumptions? Kristin Peck: Sure. Thanks, Brandon. I'll take your first, and I'll let Wetteny take the more detailed question on the guide. To be clear on the -- what we're talking about with regards to pricing is we are not changing the list price of our products. Again, this is a permanent structural change that really changes the market going forward, and it's very hard to pull back once you do it. What we're talking about is investments in what -- in the industry will call gross-to-net. So a promo to maintain share at a clinic, it might be a cross-portfolio bundling that if you buy a product, you get a discount. It would be at point of sale to a pet owner to make it more affordable. This is what we mean by gross-to-net. We feel strongly about protecting both the short-term volume and share that we have. But while doing that, invest in the long-term value of our franchises. And that's why we want to be clear, we are not -- and we've said this all year, lowering our overall list price, but we are going to be aggressive in defending our volume and protecting our share as we think about promotions and rebates. I'll let Wetteny get into the second question more broadly on guide. Wetteny Joseph: Sure, Brandon. In terms of comparing the old guide and the new guide, a few things that I would highlight here. First of all, what Kristin just highlighted with respect to the gross-to-net investments that we're making. In this guidance, not only are we assuming that the level of macro and competitive pressure persists, doesn't reflect that, I would say, on the high end of the guidance. On the low end of the guidance, we're contemplating that they would actually accelerate. And if they accelerate, that would mean we would also do so in terms of the actions we're taking from a gross-to-net perspective, which would have additional implications. So that starts to stress test the low end of the guidance for us. One other thing we have not touched on with respect to this guidance is there has been some more FX headwinds. So I would put it to around $60 million, $65 million of top-line headwind, about $30 million of bottom-line headwind from FX in terms of the dollar implications to your guidance -- the guidance. Operator: We'll move next to Michael Ryskin with Bank of America. Michael Ryskin: You touched on price a number of times. I want to ask about some of the other actions you're taking. We've seen through some of our channel checks, some pretty aggressive job cut announcements. You've talked about cost controls. Just wondering how much that's already rolled in, how much you're expecting in the second half? Anything you could say on that front? I guess there's other levers you're taking besides price to maybe try to stem some of the bleeding here. And then if I could squeeze in a quick follow-up. The new '26 guide, you framed the upside and downside scenarios a number of times. But in terms of the competitive landscape, can I ask what your assumptions are sort of like exiting the year? I know you don't have a '27 number yet, but just do you think you can return to growth? Like will we have absorbed all the incremental competition by the end of this year? Or do you think that this is still something we're going to be talking about next year and beyond? Just trying to look forward to how you see this playing out? Wetteny Joseph: Sure. I'll take the first one, Mike. You're right. We've been talking about price so far on this call, but there are many other actions that we're taking. Certainly, there's a lot of focus on commercial execution, what we're doing with respect to how we allocate dollars and investments across DTC and how we drive demand with customers, et cetera, et cetera. So in that light, we also are managing costs. We alluded to this on the last couple of calls, in fact. And you see the impact of the deliberate and meaningful actions that we're taking across our cost base to align to what the current operating environment is that we are facing while we're still investing in areas that are really important for the long-term growth and value creation of the company. So areas like R&D and parts of commercial, et cetera, we're continuing to prioritize, but we're taking the actions that we need. And you see that already playing out in the results. The second quarter, you saw SG&A down 4% year-on-year. And some of those actions are also reflected in our manufacturing costs that are down year-on-year that are contributing to where margins -- gross margins are landing for us. Of course, these will continue to draw benefits as we go through the back half of the year and into next year. And to the extent of the actions that we've been taking, some of which we already contemplated in the prior guidance. Kristin Peck: Yes. And to get to your second half of the question, which I think is just looking at, how do we see the competitive environment and how does it evolve as we get to the end of the year and we look into 2027? As you imagine, we're obviously not providing 2027 guidance today. But I mean, look, as I think Wetteny has mentioned and certainly in our script, we talked about, we think with a new competitor entering in Q2 in the U.S. in Derm, we think that our volume and our market share will continue to be under pressure. That is assumed. And I think that will take some time to work out. Is that 6, is that 12, is that 18 months? I can't tell you. And we'll see -- we're really focused on commercial actions to protect that share. But given we just got a new entrant in Q2 in the U.S. and still in other markets around the world, I think we're really looking at the end of '26 and '27 about making sure that our differentiated portfolio across Apoquel, Apoquel Chewable, Cytopoint and importantly, expecting the approval this year of long-acting Cytopoint about defending those and growing those. I mean our hope also is eventually that we continue to grow these markets, which is also our intent right now. But in this highly competitive space we're in now, where the pet owner affordability challenge is meaning some of these markets really aren't growing, particularly in Derm and paras is under pressure. We are going to be aggressive in defending our share and protecting our market share and working to grow those, but making sure if they're not growing that we are at least protecting our share. And so we'll continue to do that. And I think as you saw in our guide on both the low and the high end, we're assuming the competitive environment that we're operating in and some of the macro challenges that are certainly compounding that, that we're going to be aggressive in this environment. Operator: We'll move next to Dave Westenberg with Piper Sandler. David Westenberg: First, I wanted to maybe compliment on the guide here. You missed by in the tens of millions and you are lowering by almost $0.5 billion, which -- obviously, we're getting really good feedback from investors right now about that. Saying that, we still need to talk about that Q2. So it's a little bit of a continuation of Erin's question around that. Can you clarify how much of the Q2 deterioration now is market contraction versus maybe some competitive pressure? And if there is a way to maybe quantify ASPs, I know you're not talking about pricing, you're talking about more like rebates, but it will have a net impact on ASPs. So if you can quantify that, that would be great. And then just to pivot on the kind of the same topic. You laid a great plan around like SG&A and the strategic rebates. I know a lot of contracts, particularly like with corporate groups and whatnot tend to have these 2-year kind of things. So how do we think about changes in rebates and that kind of thing, knowing that some of your customers have a 2-year basis? And again, sorry for the length, but I also -- I did want to at least call out the prudence in the guide there. Kristin Peck: Do you want to take that first one? Wetteny Joseph: Yes, Dave, I'll take the first one. In terms of what we're seeing in Q2, certainly, we don't guide by quarter. So it's a matter of what our expectations are for the year and what we're tracking internally. And certainly, I would describe Q2 as coming in below our expectations. Now to the core of your question, trying to bifurcate between what is macro versus what is competitive, and it's not something that we would give precision around. However, I would say both are impactful and meaningfully impactful and they start to converge on each other because in a market that is not growing, certainly, the competitive actions last longer and they're more impactful. And our response to those also more meaningful with respect to the gross-to-net. So now that becomes something we do. Just to give you a couple of examples, if you look at the broad macro, certainly, visits, therapeutic visits and wellness visits in the U.S., flea, tick, and heartworm was down about 7%. Across every major category, you see down trends on visits that have an impact. OA pain are down. So were Derm north of 2%. So in each of those areas, that's a macro reflection. And by the way, a product like Cytopoint, for example, we saw some headwinds that are largely, if not entirely related to that macro versus some competitive friction. So I would say it's not a bifurcation that I can give you, but both were certainly impactful and the response that we're doing is also contributing to it. Kristin Peck: Yes. I mean, I appreciate that it's very easy for you all to see list price, to see a gross-to-net is very hard to see. And it's very hard to see because it will be dependent by promos we'll run in a given month. It may be dependent to your other point on specific contracts with a customer. So for example, it may be for customers to put us as their first and to say, they'll give us X share, we give Y pricing. So the contracts that we do are generally give or take, 2 to 3 years. And so some of those are locked in right now, but some of those are up. And so those are -- I know for you all going to be a little bit hard to see. I think we'll try to help you. But to sort of build on that, we're going to make sure that we take the actions we need to protect share and to protect volume. And so that's what you'll see in the gross-to-net. There's no way to really see that as an overall because that would be, again, customer-specific, maybe event specific. So it might be a new start, et cetera. So that's where you're going to see some of those overall. Operator: We'll move next to Chris Schott with JPMorgan. Christopher Schott: I just wanted to just touch a little bit more on the duration of some of these promotions. Are these initiatives we should assume continue until macro gets better? Or is this more about the competitive dynamics you're facing with these new launches and as that competitive landscape normalizes? I'm just really trying to get my hands around what it's going to take or your ability to back off these promotions at the right time, like how -- what the factors we should be watching that would enable that? My second question was maybe also just on Livestock. Obviously, a very strong quarter. I think you said some of that was transitory. Can you just give us a sense of what type of growth it's realistic to expect for the livestock business as we think about the second half of the year? Kristin Peck: Sure. So I'll take your first question, which is really on how -- what's the duration of some of these promos. I mean there's always been some promotional activity as you've seen in our industry. So that's not new. I would say the intensity of the promotions is both a combination. I'll talk about where it comes in to both the macro and the competitive situation. And so where you see cross portfolio and things like that, I think that's really focused for us right now on the competitive space that we're in. So I think as you look at some of the dedicated promos on competition, that will be quite different. So in any given therapeutic area, there is either more of a headwind. So I think Wetteny just mentioned it, as you think about Cytopoint, that's pretty much macro. We don't really have a competitor that's got in full supply against that product. I think let's be clear, as you think about Derm, it is mostly a competitive situation that is driving the Derm situation. As you think about paras, I think it's a little more macro. And then we say that because as you look at both wellness visits down 7% overall in the quarter, but importantly, the deceleration of growth across alternative channels which had been making up for. Again, you've seen paras under attack in a sense from a wellness visit for a while now. But I think what's really changed in the parasiticides category has been also alternative channels. So in any given therapeutic area, it might be more competition or it might be more the macro situation. But I think what we're really seeing and what would be the signs, I think that's really the essence of your question, what we see. As we get to more of a stabilization of share, as we look at quarter-over-quarter, that starts to stabilize, I think you'll see us pull back because, again, our aggressive promos and rebating and point of sale right now is focused, as I mentioned, on protecting our share and making sure we protect our volume. So as we see that stabilize, I think those are going to be the signs that would say that we'll step off some of those gross-to-net investments. Wetteny Joseph: And I'll take, Chris, the question on Livestock. Look, we've been very pleased with the performance on Livestock, not only in the quarter, but also on a year-to-date basis. I would say there are strong fundamentals here that we believe to be sustainable, likely in the mid- to high single-digit range when we look at this year. We look at the second quarter, particularly in the U.S., we grew total globally 11%, right? The U.S. was up 23%. Now in that context, we're saying some of the drivers were transitory. For example, timing of supply for certain products that we had really affected the quarter as well as demand that we're seeing for injectable parasiticides driven by New World screwworm, for example, in the U.S. So when we parse those out, we would put the quarter in the U.S. into the high single-digit range, I would say, on a normalized basis. And again, for the year, we continue to expect strong fundamentals to drive Livestock performance. Operator: We'll take our next question from Jon Block with Stifel. Jonathan Block: Also a 2-parter. Wetteny, what's the update for 2026 price realization? Has that changed versus, I think, prior, it was 1% to 2% guidance for price this year? And I just want to verify that the gross-to-net would show in that updated number, if there is one, and where that update is coming from? Is it key franchises? Is it other when you fight back against the generics? And then, Kristin, regarding the promos, is it Derm? Is it paras? Is it both? I thought you mentioned it's U.S. specific. I just want to verify that. And just to tack on to that last one, maybe a difficult question. Kristin, do you have the better products? Like do you have the better AD JAK product? Apoquel was revolutionary, but it's 10 years old. Trio was revolutionary, but you do have others that are resonating with a marketing approach. So it's one thing to ramp up the promos, but I think the other key question here is the products in the field and are they up -- just enough to compete effectively? Wetteny Joseph: So I'll take the first part of your question, Jon. Certainly, you saw in the quarter, price was flat. You're seeing the impact of the gross-to-net responses that we've already covered on this call at length, at least, I won't repeat those. And so what that would translate into, if you look at the guidance we just issued, on the range, it could be in the 0% to negative 1%, potentially negative 2% as you get towards the low end of the guidance, given our response will also be accelerated with respect to what competitors are doing, which are largely competing on price today in these categories. So that's why I would range bound it for you in terms of what this means for the year. Kristin Peck: Yes. And to answer your second question, which is on the promos, is it just Derm? Are we talking about paras? Are we talking about both? It is most definitely both. And we're also looking at cross-portfolio bundling because I think we have a very strong portfolio. We continue, and we said on every call that we continue to have differentiated products in each of these categories. But when pet owner affordability becomes a big issue, there becomes a question of good enough. We absolutely have differentiation in both Trio, in Apoquel, in Apoquel Chewable, we have a chewable. We have more safety, more efficacy than anybody else who we're competing against in these markets. Whether we talk about Cytopoint, even Cytopoint long-acting, we will continue to defend that differentiation. But we're also -- we don't want to be naive and believe that in this competitive environment with people offering significant promotional or rebate discounts, does someone now say, well, I'll try the other one and see how it is. We are starting to see in Europe, people switch back after experiencing it. But our focus has to be on overall value. And our value is in the differentiation in the safety and efficacy of our products. But right now, we also have to admit that in a macro environment where affordability is a much bigger issue, we don't -- we want to make sure that we're meeting our customers where they are and understanding that we need to be defending the share. And if a low enough price makes someone try another product, we want to discourage that behavior. So we're really focused again on the differentiation on the overall value, but understanding the macro environment we operate in is a little bit different than it used to be. Operator: We'll take our next question from Daniel Grosslight with Citi. Daniel Grosslight: One of your competitors noted that there's been a very high correlation between direct-to-consumer channel investment and market share gains. I know you mentioned the alt channel has decelerated a bit this quarter into the back half of the year. But I'm curious how, if at all, are you changing your marketing channel strategy, your investments in DTC and if you are also seeing a correlation between or a high ROI between direct-to-consumer investment and market share retention? Kristin Peck: Sure. We -- obviously, we are heavily invested in direct-to-consumer. But importantly, to this question, part of direct-to-consumer is actually advertising on -- at a retail center or on an online site. And we do see very strong ROI. And you see the strongest ROI, and this would be obvious because you're really focusing when you're on those sites on conversion. So you already have someone who you know is looking for the product and you're converting it. So by far, we would absolutely agree. The highest ROI in direct-to-consumer advertising is like at the retailer where someone is actually searching for a product and you're helping convert them and you already have an interested party. We've also been really focused on continuing to grow markets as well. That ROI is important, but that's a longer-term ROI versus the ROI we're seeing as you invest at point of sale, either in the clinic or in retail, et cetera. So we are very focused as we think about these gross-to-net investments and this direct-to-consumer advertising at point of sale, whether that be in a clinic, whether that be on a website or whether that be in a store. Operator: At this time, we've reached our allotted time for questions. I'll now turn the call back over to the CEO, Kristin Peck, for any additional or closing remarks. Kristin Peck: Great. Thanks, everybody, for joining us today. And as always, really appreciate your questions and your interest in Zoetis. We know this is a moment that demands even greater focus and execution, and we look forward to keeping you updated on our progress. I also want to reiterate that we remain confident in the long-term fundamentals of animal health in the strength and differentiation of our portfolio and our pipeline and our ability to create value. Thanks for joining us. Operator: Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect. Before you buy stock in Zoetis, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Zoetis wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $403,337!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,334,946!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 13, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends Zoetis. The Motley Fool has a disclosure policy. Zoetis (ZTS) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Interested in Zoetis Inc.? Here are five stocks we like better. Zoetis reported mixed second-quarter results: Revenue was $2.5 billion, flat reported and down 1% organically, while adjusted EPS rose 4% to $1.87 due partly to share repurchases. Weak U.S. companion-animal demand offset growth in livestock, diagnostics and international markets. Pet-care pressures led to a lowered outlook. Declining veterinary visits, selective pet-owner spending and increased competition hurt companion-animal and dermatology sales; Zoetis now expects full-year organic operational revenue to decline 3% to 1% and adjusted net income to decline 9% to 5%. Diagnostics and livestock provided key offsets, with revenue rising 12% and 11%, respectively. The company said July trends had not shown stabilization and cited additional foreign-exchange headwinds of roughly $60 million to $65 million to revenue. Which Pet Stock Should Get Your Tail Wagging in 2024? Zoetis (NYSE:ZTS) reported second-quarter revenue of $2.5 billion, flat on a reported basis and down 1% organically, as pressure in U.S. companion-animal categories offset growth in livestock, diagnostics and international markets. Adjusted net income was $781 million, down 2% organically, while adjusted diluted earnings per share rose 4% to $1.87, benefiting from a lower share count following share repurchases. Chief Executive Officer Kristin Peck said the quarter fell short of the company’s expectations amid declining veterinary clinic visits, more selective spending by pet owners and greater promotional activity from competitors. Zoetis lowered its full-year outlook, now expecting organic operational revenue to decline 3% to 1% and adjusted net income to decline 9% to 5%. → No Hangover: Revisiting Microsoft One Week After Earnings MarketBeat Week in Review – 07/31 - 08/04 Peck said veterinary clinic visits continued a multiyear decline, while price increases in pet care have outpaced broader consumer inflation. Pet owners have become more selective in their spending, with clinic revenue shifting toward urgent and emergency care and premium preventative and chronic-care products facing pressure, she said. Global companion-animal revenue was $1.7 billion, down 6% in the quarter. U.S. companion-animal revenue declined 11% to $1 billion, while international companion-animal revenue increased 5% to $664 million. → MarketBeat Week in Review – 08/03 - 08/07 Rising Dividend Make Zoetis a Doggone Winner Key dermatology revenue fell 16% to $395 million globally. In the U.S., dermatology revenue declined 18% to $251 million, as canine pruritic clinic visits fell by more than 2%, according to Peck. Chief Financial Officer Wetteny Joseph said the company’s U.S. dermatology franchise retained about 86% in-clinic share during the quarter, though share declined 5 percentage points sequentially and 10 points from a year earlier. Zoetis has begun using targeted promotions, rebates and other “growth-to-net” investments to protect volume and share rather than lowering list prices, Peck said. Those actions can include clinic-specific promotions, cross-portfolio bundles and point-of-sale discounts for pet owners. → Why the Landlord of the AI Boom Could Outlast the Chipmakers “We are not changing the list price of our products,” Peck said in response to analyst questions. “What we’re talking about is investments in what, in the industry, they’ll call growth to net.” The Simparica franchise generated $442 million in revenue, flat globally. Simparica Trio revenue fell 1% to $350 million, while Simparica revenue rose 4% to $91 million. International franchise growth was offset by U.S. pressure from softer flea, tick and heartworm visits, as well as a more competitive and promotional marketplace. U.S. Simparica franchise revenue declined 6% to $308 million. Joseph said Simparica Trio held approximately 21% in-clinic share in U.S. oral parasiticides, nearly double its nearest competitor, and its puppy share was about 28%. Global osteoarthritis pain monoclonal-antibody revenue was $147 million, down 3%. Canine OA pain products Librela and Lenivia produced $105 million in revenue, down 8%, while feline OA pain products Solensia and Portela generated $42 million, up 12%. U.S. canine OA pain revenue declined 24% to $34 million, reflecting a strong prior-year comparison, softer clinic traffic and affordability pressures on premium therapies. International OA pain revenue increased 7% to $96 million, supported by early launches of long-acting Lenivia and Portela in the European Union and Canada. Peck said Zoetis expects U.S. approval of long-acting Cytopoint later in 2026. The company also said early experience with Lenivia and Portela has been encouraging and that it expects further market expansion in the coming year. Companion-animal diagnostics revenue rose 12% to $118 million, driven by adoption of technologies including Vetscan Imagyst and Vetscan OptiCell. During the quarter, Zoetis completed its acquisition of VitalRADS, a veterinary teleradiology services platform, expanding its capabilities in veterinary imaging interpretation. Peck said commercial validation of Vetscan OmniMax, a multimodal chemistry platform that the company views as a potential blockbuster opportunity, remains expected by year-end. Livestock revenue increased 11% to $731 million, with U.S. livestock revenue rising 23% to $222 million. Growth was driven by cattle and poultry, improved product supply and elevated U.S. demand for Dectomax and other injectable parasiticides in connection with the New World screwworm outbreak. Joseph said several factors behind the U.S. livestock performance were transitory, including supply timing and screwworm-related demand. Zoetis expects U.S. livestock growth to moderate to the mid-single-digit range in the second half, while citing mid- to high-single-digit growth as a sustainable range for the business’ broader fundamentals. Zoetis now expects 2026 revenue of $9.12 billion to $9.32 billion. It projected adjusted net income of $2.57 billion to $2.62 billion, adjusted diluted EPS of $6.15 to $6.25, and reported diluted EPS of $5.55 to $5.65. Joseph said the revised forecast incorporates sales trends through July, which had “not yet indicated market stabilization.” The upper end assumes competitive and pricing pressures remain contained, while the lower end contemplates accelerated pressure, greater dermatology and parasiticide share losses, continued July-like weakness and slower livestock uptake. The company also cited an additional foreign-exchange headwind of roughly $60 million to $65 million to revenue and about $30 million to profit compared with its prior outlook. Zoetis repurchased more than $550 million of shares during the quarter. Joseph said the company is maintaining investment in R&D and selected commercial priorities while pursuing cost and productivity actions; adjusted SG&A declined 4% operationally in the quarter. Separately, Peck said Abhay Nayak was promoted to executive vice president and president of U.S. Commercial Operations. Jay Saccaro will join Zoetis on Aug. 17 as executive vice president, chief financial officer and chief operating officer, a newly created role overseeing finance as well as global manufacturing and supply. Joseph will remain a special advisor on financial matters until early 2027 to support the transition. Zoetis Inc (NYSE: ZTS) is a global animal health company that develops, manufactures and markets a broad portfolio of products and services for companion animals and livestock. The company's offerings include pharmaceuticals, vaccines and biologics, parasiticides and anti-infectives, as well as diagnostic instruments, consumables and laboratory testing services. Zoetis serves the veterinary community, livestock producers and other animal-health customers with products designed to prevent, detect and treat disease and to support animal productivity and welfare. Zoetis traces its roots to the animal health business of Pfizer and became an independent, publicly traded company following a 2013 separation and initial public offering. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Zoetis Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Zoetis Inc. ZTS used its second-quarter 2026 earnings call to reset expectations for 2026 as weaker veterinary clinic traffic, pet-owner price sensitivity and heavier competition pressured major Companion Animal franchises. CEO Kristin Peck said management is not assuming the market becomes easier soon. The response centers on targeted promotions, sharper commercial execution, cost discipline and continued investment in innovation. CEO Kristin Peck said pressure intensified in the second quarter, particularly in Dermatology and U.S. parasiticides. Global Companion Animal revenues fell 6% on an organic operational basis, while U.S. Companion Animal declined 11%. CFO Wetteny Joseph said Key Dermatology revenues fell 16%, with Apoquel facing softer demand and stronger promotional competition. The Simparica franchise was flat globally as international growth offset U.S. weakness. ZTS’ second-quarter 2026 adjusted earnings of $1.87 per share exceeded the Zacks Consensus Estimate of $1.84. However, revenues of $2.47 billion missed the Zacks Consensus Estimate of $2.49 billion by 0.90%. Zoetis Inc. price-consensus-eps-surprise-chart | Zoetis Inc. Quote CFO Wetteny Joseph revised full-year revenue guidance to $9.12 billion to $9.32 billion, implying an organic operational decline of 3% to 1%. Adjusted diluted earnings are now expected at $6.15 to $6.25. Adjusted net income is projected at $2.57 billion to $2.62 billion, down 9% to 5% organically. CFO Wetteny Joseph said management incorporated July trends, which had not shown market stabilization. CFO Wetteny Joseph said the high end assumes contained pricing and competitive pressure, manageable share losses in Dermatology and parasiticides, and continued strength in Livestock and Diagnostics. The low end assumes worsening competition, continued July weakness and slower Livestock uptake. A Morgan Stanley analyst pressed management on pricing. CEO Kristin Peck said Zoetis is avoiding broad list-price cuts and instead using targeted gross-to-net investments, including rebates, promotions, cross-portfolio bundles and point-of-sale support. A William Blair analyst asked about the margin implications. CEO Kristin Peck reiterated that these actions are intended to protect volume and share while preserving the longer-term value of the franchises. CFO Wetteny Joseph later told a Stifel analyst that full-year price realization could range from flat to negative 1%, and potentially negative 2% near the low end of guidance, depending on competitive responses. CEO Kristin Peck highlighted diversification as an important counterweight. Livestock revenue grew 11% organically, while Companion Animal Diagnostics increased 12%. CFO Wetteny Joseph said U.S. Livestock rose 23%, helped by cattle demand, supply timing and New World screwworm-related demand. He said some Q2 drivers were transitory and expects second-half U.S. Livestock growth to moderate. CEO Kristin Peck also pointed to Diagnostics as a growth platform. Zoetis completed the VitalRADS acquisition and continued developing Vetscan OmniMax, with commercial validation still expected by year-end. CEO Kristin Peck said Zoetis continues to advance a pipeline containing more than 12 potential blockbusters, including opportunities in chronic kidney disease, oncology, cardiology, anxiety and obesity. The company is also expanding its OA pain portfolio with Lenivia and Portela in Canada and Europe. CEO Kristin Peck said early experience supported broader launches and reinforced management’s confidence in the category. CFO Wetteny Joseph said adjusted SG&A declined 4% operationally as cost actions took hold, while adjusted R&D rose 4%. Zoetis also repurchased more than $550 million of shares during the quarter. CEO Kristin Peck framed leadership changes as part of the push for faster execution. Abhay Nayak was promoted to lead U.S. Commercial Operations, where performance has been under pressure. Jay Saccaro is joining as executive vice president, CFO and COO, combining finance with oversight of global manufacturing and supply. CEO Kristin Peck said the new structure is intended to improve decision-making and connectivity across operations. Management’s tone remained cautious on the near-term market but firm on its priorities: defend share, control costs, support innovation and use portfolio diversification to navigate weaker Companion Animal demand. ZTS carries a Zacks Rank #4 (Sell) at present. Its Value Score of A, Momentum Score of A and VGM Score of B are favorable Style Scores, while the Growth Score of D is weaker. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Under the Zacks framework, favorable Style Scores are designed to complement top Zacks Rank #1 or 2 (Buy) stocks, while a Zacks Rank #4 indicates an unfavorable estimate-revision backdrop. The Zacks Rank can change as analysts revise estimates following the latest results. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Zoetis Inc. (ZTS) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Never miss an important update on your stock portfolio and cut through the noise. Over 7 million investors trust Simply Wall St to stay informed where it matters for FREE. Zoetis (ZTS) is in focus after reporting second quarter 2026 results that beat earnings per share expectations but came with flat sales, a cut to full year guidance and the appointment of a new CFO/COO. See our latest analysis for Zoetis. The Zoetis share price has reacted positively to the latest earnings and leadership news, with a 1-day share price return of 3.87% and short term gains contrasting with a year-to-date share price decline of 38.64% and a 5-year total shareholder return decline of 59.10%. This points to longer term momentum still fading. If you are weighing Zoetis alongside other opportunities in healthcare and AI, it can help to see what else is attracting attention right now through our screener of 42 healthcare AI stocks Zoetis now trades at a sizeable discount to both analyst targets and some intrinsic value estimates after a long slide, even after the latest bounce. Is this discount reflecting temporary caution or a more fundamental reset in expectations? Zoetis last closed at $77.27, compared with a narrative fair value estimate of $92.92 that points to a material upside gap in expectations. Read the complete narrative. The current narrative for Zoetis leans on steady earnings growth, firm margins and a valuation anchored in cash flow strength and future profit potential. Curious which assumptions really move that $92.92 fair value? The full breakdown spells out the earnings profile, margin resilience and the profit multiple that tie this story together. Result: Fair Value of $92.92 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, Zoetis still faces risks from pressure in its US Companion Animal revenue, as well as from the use of higher debt to fund past share repurchases. Find out about the key risks to this Zoetis narrative. Sentiment on Zoetis is clearly mixed, with both caution and optimism in play, so it makes sense to examine the numbers yourself and move quickly while the information is fresh. To see how those concerns and bright spots balance out, take a close look at the 5 key rewards and 1 important warning sign. If you are serious about building a stronger portfolio, do not stop with Zoetis. Use the Simply Wall Street Screener to quickly spot fresh opportunities that match your goals. Target potential mispricing by scanning 50 high quality undervalued stocks. These may pair solid business profiles with prices that do not fully reflect their fundamentals. Strengthen your income stream by reviewing 8 dividend fortresses. These can combine higher yields with a focus on resilience. Protect your downside by assessing 78 resilient stocks with low risk scores. These screen well on financial health and lower overall risk scores. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include ZTS. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance fell short of expectations due to a multiyear trend of declining veterinary clinic visits and pet owners becoming more selective in spending as price increases outpaced inflation. Management observed a shift in the nature of competition where new entrants are using high levels of discounting, rebates, and cross-portfolio bundling to capture existing patients rather than expanding the market. U.S. revenue declined 7%, while the U.S. Companion Animal sub-segment declined 11%., driven by significant pressure in Dermatology and parasiticides where competitive intensity and affordability concerns were most pronounced. Livestock delivered strong 11% growth, providing a critical hedge against Companion Animal weakness, though some drivers like New World screwworm demand are considered transitory. The company is responding with 'gross-to-net' investments—targeted promotions and rebates—to protect volume and share without permanently altering long-term list prices. Organizational changes, including the appointment of a new CFO/COO and a new President of U.S. Commercial Operations, are designed to accelerate decision-making and execution agility. Diagnostics remains a strategic catalyst, growing 12% as clinic revenue shifts toward urgent care and the company expands into veterinary imaging interpretation via the VitalRADS acquisition. Full-year organic operational revenue guidance was revised to a decline of 3% to 1%, reflecting the assumption that current market pressures will persist or potentially accelerate. The low end of the guidance range accounts for a scenario where July's market weakness continues through the second half with greater share losses in key categories. Management expects to maintain aggressive gross-to-net investments until market share and volume stabilize, prioritizing near-term defense over immediate margin expansion. Innovation remains the primary long-term growth driver, with the anticipated U.S. approval of long-acting Cytopoint and the commercial validation of the Vetscan OmniMax platform expected by year-end. Cost discipline initiatives, including reduced discretionary spend and compensation-related expenses, are expected to continue providing a partial offset to revenue headwinds. Jay Saccaro will join as EVP, CFO, and COO on August 17, a new role combining finance with global manufacturing and supply to improve supply chain connectivity. Foreign exchange headwinds are estimated to impact the top line by approximately $60 million to $65 million and the bottom line by about $30 million for the full year. Generic competition for Cerenia and Convenia in the U.S. necessitated pricing adjustments to support dose recapture, albeit at lower realized price points. The company increased share buyback activity to over $550 million in the quarter, citing current valuation as an attractive use of capital despite operational headwinds. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management clarified they are avoiding list price cuts because they are permanent structural changes that are difficult to reverse once the market recovers. Gross-to-net investments (rebates and promos) allow for targeted, time-bound defense of volume and share at the point of sale or for new patient starts. Promotional intensity is currently driven by a combination of new competitor launches and macro affordability challenges. The company will consider reducing these investments once quarter-over-quarter market share trends show clear stabilization. Management acknowledged that while their products (Trio, Apoquel) have superior safety and efficacy, pet owners may trial cheaper alternatives due to budget constraints. They noted early signs in Europe of pet owners switching back to Zoetis products after experiencing competitors, reinforcing their belief in long-term differentiation. Second-half Livestock growth is expected to moderate to the mid-single-digit range as Q2 benefited from transitory supply timing and specific disease outbreaks. Underlying fundamentals remain solid, supported by favorable producer economics and global protein demand.

This article first appeared on GuruFocus. Revenue: $2.5 billion, flat on a reported basis and down 1% on an organic operational basis. Adjusted Net Income: $781 million, down 2% on an organic operational basis. Adjusted Diluted EPS: $1.87, up 4% year-over-year. Adjusted Gross Margin: 72.9%, down approximately 40 basis points on a reported basis. Adjusted Operating Expenses: $764 million, down 2% operationally. Global Companion Animal Revenue: $1.7 billion, down 6%. Key Dermatology Revenue: $395 million, down 16%. OA Pain mAbs Revenue: $147 million, down 3% globally. Simparica Franchise Revenue: $442 million, flat globally. Companion Animal Diagnostics Revenue: $118 million, up 12%. Livestock Revenue: $731 million, up 11%. US Revenue: $1.3 billion, down 7%. International Revenue: $1.2 billion, up 6%. Full Year 2026 Revenue Guidance: $9.12 billion to $9.32 billion, representing a decline of 3% to 1% year-over-year on an organic operational basis. Full Year 2026 Adjusted Net Income Guidance: $2.57 billion to $2.62 billion, representing a decline of 9% to 5% year-over-year on an organic operational basis. Full Year 2026 Adjusted Diluted EPS Guidance: $6.15 to $6.25. Warning! GuruFocus has detected 5 Warning Signs with GOGO. Is ZTS fairly valued? Test your thesis with our free DCF calculator. Release Date: August 06, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Zoetis Inc (NYSE:ZTS) delivered strong 11% organic operational revenue growth in its Livestock segment, driven by broad-based demand in cattle and poultry, including elevated demand for Dectomax related to the New World screwworm incursion. The company's diversified portfolio provided resilience, with international revenue growing 6% and emerging markets contributing broad-based strength across Livestock, Companion Animal, and Diagnostics. Companion Animal Diagnostics revenue grew 12%, fueled by sustained demand for innovative tools like Vetscan Imagyst and OptiCell, and the acquisition of VitalRADS expands capabilities into teleradiology. The OA pain franchise showed encouraging international momentum, with Lenvia and Portela launches in the EU and Canada driving early contributions and supporting category growth, while Feline OA pain mAbs grew 12% globally. Zoetis Inc (NYSE:ZTS) maintained strong P&L discipline, with adjusted operating expenses down 2% operationally and SG&A down 4%, while continuing to invest in R&D and returning over $550 million to shareholders through buybacks. Zoetis Inc (NYSE:ZTS) experienced a 7% decline in US revenue, with US Companion Animal revenue down 11%, reflecting continued pressure from declining veterinary clinic visits and value-conscious pet owner behavior. Key Dermatology revenue fell 16% globally, with US Key Dermatology down 18%, due to intensified competitive activity, higher promotional incentives from new entrants, and softer pruritic visits, leading to significant share losses. The company revised its full-year 2026 guidance downward, now expecting organic operational revenue to decline 3% to 1% and adjusted net income to decline 9% to 5%, reflecting persistent headwinds and no signs of market stabilization. US parasiticides franchise (Simparica) declined 6%, pressured by softer flea, tick, and heartworm visits, a more promotional environment, and growth in alternative channels that was insufficient to offset clinic declines. Zoetis Inc (NYSE:ZTS) faced generic competition on Cerenia and Convenia in the US, leading to targeted price adjustments that weighed on near-term price realization and contributed to flat overall price in the quarter. Q: Can you clarify how much of the Q2 deterioration is now market contraction versus competitive pressure, and can you quantify the impact of gross-to-net pricing actions on ASPs?A: Wetteny Joseph (CFO) stated that both macro and competitive factors were "meaningfully impactful" and converge, as competitive actions have a larger effect in a non-growing market. He cited macro headwinds like US flea, tick, and heartworm visits down 7% and Derm visits down over 2%, but noted that the company's response, including gross-to-net investments, also contributes to the impact. Kristin Peck (CEO) added that gross-to-net actions are customer- and event-specific, making them difficult to quantify externally, but they are focused on protecting volume and share. Q: What is the updated 2026 price realization expectation, and is the gross-to-net impact reflected in that number? Are the promotional actions focused on Derm, Parasiticides, or both?A: Wetteny Joseph (CFO) confirmed that price was flat in Q2 due to gross-to-net responses, and the new guidance implies price realization of 0% to negative 1%, potentially reaching negative 2% at the low end if competitive pressures accelerate. Kristin Peck (CEO) clarified that promotional actions are being deployed across both Derm and Parasiticides, including cross-portfolio bundling, to defend share in an environment where pet owner affordability is a major factor. Q: How does the updated guidance compare to the prior guidance, and what are the key items that changed within the assumptions?A: Wetteny Joseph (CFO) explained that the new guidance assumes the current level of macro and competitive pressure persists at the high end, while the low end contemplates an acceleration of these pressures, which would trigger additional gross-to-net actions. He also noted that the guidance now includes approximately $60-65 million of top-line and $30 million of bottom-line headwinds from foreign exchange. Q: What is the duration of the promotional activities, and what factors would enable Zoetis to pull back on these initiatives?A: Kristin Peck (CEO) stated that the intensity of promotions is driven by both macro conditions and competitive dynamics, with the mix varying by therapeutic area. She indicated that as market share stabilizes quarter-over-quarter, the company would step back from aggressive gross-to-net investments. The key sign to watch is the stabilization of share losses, which would signal that the promotional intensity can be reduced. Q: How are you changing your marketing channel strategy and direct-to-consumer (DTC) investments, and are you seeing a correlation between DTC investment and market share retention?A: Kristin Peck (CEO) confirmed that Zoetis is heavily invested in DTC, with the highest ROI seen at the point of sale, such as retail sites or online platforms where consumers are actively searching for products. She noted that while DTC investment for market expansion has a longer-term ROI, the company is currently focusing on point-of-sale investments in clinics, websites, and stores to drive conversion and defend share in the current environment. Q: Can you detail the overall dollar share loss anticipated in Derm and Simparica embedded in the guidance, and how conservative is the US Companion Animal outlook?A: Kristin Peck (CEO) and Wetteny Joseph (CFO) did not provide specific dollar figures for expected share losses but emphasized that the guidance reflects the persistence of current trends, including softer end-market demand and intensified promotional activity from competitors. The high end of the range assumes contained competitive pressures, while the low end reflects an acceleration of these pressures, with the company prepared to respond aggressively with gross-to-net investments to protect volume. Q: What is the realistic growth expectation for the Livestock business in the second half of the year, given the strong Q2 performance?A: Wetteny Joseph (CFO) stated that while Q2 global Livestock growth was 11% (US up 23%), some drivers were transitory, such as product supply timing and demand for injectable parasiticides related to the New World screwworm outbreak. On a normalized basis, US Livestock growth would be in the high single-digit range, and for the full year, the company expects strong fundamentals to drive mid- to high single-digit growth. Q: How do you view the balance of organizational stability versus evolving the leadership team, given recent appointments like the new CFO/COO and US Commercial President?A: Kristin Peck (CEO) expressed confidence in the team being built, noting that recent changes, including the promotion of Abhay Nayak to EVP and President of US Commercial Operations and the hiring of Jay Saccaro as EVP, CFO, and COO, are designed to enable faster decision-making and execution in the current environment. She emphasized that the leadership evolution is focused on delivering in the face of market pressures while continuing to invest in the innovation pipeline. Q: Are the promotional activities and gross-to-net investments primarily a US-specific response, or are they being deployed globally?A: Kristin Peck (CEO) indicated that while the US is facing the most significant pressure, the company is taking targeted actions market-by-market internationally as well. She noted that developed European markets are also experiencing competitive penetration and promotional intensity, and Zoetis is tailoring its approach to defend share where it matters most while protecting the long-term value of its franchises. Q: Do you believe Zoetis has the better products in the market, and how are you addressing the "good enough" dynamic in a value-conscious environment?A: Kristin Peck (CEO) affirmed that Zoetis products, such as Apoquel Chewable and Simparica Trio, offer superior safety and efficacy compared to competitors. However, she acknowledged that in an affordability-constrained market, some pet owners may be willing to try alternatives if priced low enough. The company is focused on reinforcing the differentiated value of its portfolio while using targeted promotions to discourage switching and defend its market-leading positions. For the complete transcript of the earnings call, please refer to the full earnings call transcript.