Despite the current social media buzz and the temporary dip in sales of its flagship osteoarthritis franchise (Librela and Solensia), Zoetis remains the world’s strongest animal health company and arguably one of the best long-term compound growth opportunities in the healthcare sector.
The companion animal market is growing at a structural rate of 6-8% annually and is projected to reach $200 billion by 2030. Zoetis dominates this market with 40-60% market share in key categories (dermatology, parasiticides, and chronic pain). Even with the current downturn, the company maintains historical organic growth of 8-10%, adjusted operating margins of 33-35%, and generates over $2.5 billion in free cash flow annually. Few businesses combine such growth, pricing power, and high barriers to entry.
The current problem is well-known: negative perceptions on social media regarding anti-NGF monoclonal antibodies (Librela/Solensia) have led to an 11% drop in the OA franchise in 2025 and have scared off some investors. However, clinical data continue to support the safety and efficacy of these products, and historical experience with other veterinary drugs (such as Apoquel in 2014) demonstrates that these media storms last between 12 and 24 months. Meanwhile, Zoetis already has approval in Europe and Canada for the new long-acting injectables Lenivia (dogs) and Portela (cats), which last three months, reducing the frequency of veterinary visits and improving treatment adherence.
Looking five years ahead, the outlook is clearly favorable:
Recovery and re-acceleration of the OA franchise (it will return to double-digit growth in 2027-2028).
Progressive launch of the next generation of biologics (dermatology mAbs, oncology, and vaccines).
Sustained growth in emerging markets (>12% annually).
Potential aggressive share buyback if the price remains depressed.
Currently, the stock is trading at just 23-24 times expected 2026 earnings, below its historical average of 30x and well below human peers such as Eli Lilly or Novo Nordisk. With expected EPS growth of 10-12% compounded annually until 2030, the total estimated return (price + dividends) easily exceeds 15% annualized.
Conclusion: The current fear presents an exceptional buying opportunity. Anyone investing in Zoetis today at prices near $120-$125 and holding for 5 years has a very high probability of doubling or tripling their capital with very controlled risk. Clear recommendation: BUY and hold.
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