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Zoetis: Credit Suisse ups target to $67 from $61

May 24, 2017

Credit Suisse analyst, Erin Wright, reiterated her Outperform rating on shares of Zoetis Inc. (NYSE: ZTS) and raised her price target to $67 from $61 noting that 94% of US vet clinics prescribe ZTS’s blockbuster Apoquel, but its market share is only 49% of patients, suggesting ample room to run as it gains traction in acute cases and takes share from conventional therapies (steroids 30%, shampoos/topicals).

Cytopoint, ZTS’s leading atopic dermatitis franchise should expand the treatment category, offering upside to the company’s $500 million combined estimate in 2019 (3-year CAGR of +26%). Of note, as its direct sales force naturally dedicates greater resources to new products, Apoquel, Cytopoint, and Simparica added 12% points. to 1Q companion animal growth. While new products will continue to be meaningful drivers, the analyst estimates underlying companion sales rose 7% in 1Q (adj. for stocking, fluid products, SKU and day shifts), representing healthy momentum across its base portfolio as well, which the analyst believes should continue, consistent with robust industry demand trends.

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