Zoetis Stock Hits Key Support – Is This The Buying Opportunity?
Zoetis (ZTS) stock should be on your watchlist. Here is why – it is currently trading in the support zone ($135.63 – $149.91), levels from which it has bounced meaningfully before. In the last 10 years, Zoetis stock received buying interest at this level 7 times and subsequently went on to generate 28.8% in average peak returns.
| Peak Return | Days to Peak Return | |
|---|---|---|
| 7/17/2020 | 20.7% | 110 |
| 3/4/2021 | 10.0% | 32 |
| 4/5/2021 | 56.6% | 268 |
| 11/10/2022 | 10.4% | 22 |
| 12/20/2022 | 36.2% | 252 |
| 11/1/2023 | 32.3% | 119 |
| 4/22/2024 | 35.3% | 149 |
But is the price action enough alone? It certainly helps if the fundamentals check out. For ZTS Read Buy or Sell ZTS Stock to see how convincing this buy opportunity might be.
Single stock can be risky, but there is a huge value to a broader diversified approach we take with Trefis High Quality Portfolio. We go beyond just equities. Is a portfolio of 10% commodities, 10% gold, and 2% crypto in addition to equities and bonds – likely to return more during the next 1-3 years, and protect you better if markets crash 20%? We have crunched the numbers.
Here are some quick data points for Zoetis that should help decision:
- Revenue Growth: 5.3% LTM and 5.5% last 3 year average.
- Cash Generation: Nearly 23.6% free cash flow margin and 37.5% operating margin LTM.
- Recent Revenue Shocks: The minimum annual revenue growth in last 3 years for ZTS was 2.8%.
- Valuation: ZTS stock trades at a PE multiple of 24.3
- Opportunity vs S&P: Compared to S&P, you get higher valuation, higher revenue growth, and better margins
For quick background, Zoetis provides animal health medicines, vaccines, and diagnostic products for various livestock species, preventing diseases affecting respiratory, gastrointestinal, and reproductive systems.
| ZTS | S&P Median | |
|---|---|---|
| Sector | Health Care | – |
| Industry | Pharmaceuticals | – |
| PE Ratio | 24.3 | 23.9 |
|
|
||
| LTM* Revenue Growth | 5.3% | 5.2% |
| 3Y Average Annual Revenue Growth | 5.5% | 5.3% |
| Min Annual Revenue Growth Last 3Y | 2.8% | -0.1% |
|
|
||
| LTM* Operating Margin | 37.5% | 18.6% |
| 3Y Average Operating Margin | 36.6% | 17.8% |
| LTM* Free Cash Flow Margin | 23.6% | 13.3% |
*LTM: Last Twelve Months
What Is Stock-Specific Risk If The Market Crashes?
That said, ZTS isn’t immune to market downturns. It fell about 17% during the 2018 correction, took a sharper hit of 36% in the Covid crash, and dropped nearly 47% in the recent inflation shock. Even with solid fundamentals, the stock can still see big swings when broader sell-offs hit. Quality helps, but no stock is completely crash-proof.
But the risk is not limited to major market crashes. Stocks fall even when markets are in good shape – think events like earnings, business updates, outlook changes. Read ZTS Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.