Zoetis stock faces valuation decline amid pet care market shifts

Zoetis, a major player in the animal and pet care industry, has seen its stock price decline significantly, trading at 13 times free cash flow compared to a peak of 70 times in 2023. This decline follows a period of stalled growth in next-generation osteoarthritis medicines for pets and a dip in U.S. veterinary visits.

Despite recent organic sales dipping 1% and modest earnings growth, the company maintains a strong R&D pipeline with management expecting 12 blockbuster treatments—those generating at least $100 million in annual sales—by 2030. The global animal healthcare market is projected to grow by approximately 5% annually through 2035.