Sarah Roden

About the Author Sarah Roden

Sarah writes about stock market news for TipRanks. She graduated as member of Phi Beta Kappa from the University of Richmond in Richmond, Virginia.

Ackman’s Pershing Group Buys Stake in Zoetis

Zoetis, Inc. (NYSE: ZTS) is an animal health company that produces vaccines for pets and livestock. Based in Florham Park, New Jersey, the animal health company was once a subsidiary of Pfizer but became independent in February 2013. Bill Ackman, the philanthropic founder and CEO of Pershing Square Capital Management, bought an 8.5% stake in Zoetis for roughly $2 billion on November 11th. Additionally, Zoetis released their third quarter report on November 4th, topping analyst expectations.

Highlights from the Q3 report include a reported $0.41 earnings per share on an adjusted diluted basis, a 21% year-over-year increase. This figure beat the analyst consensus of $0.37 by $0.04. Revenue for the third quarter met the analyst estimate of $1.2 billion; a 10% year-over-year increase. CEO Juan Ramón Alaix attributed the performance to “13% operational revenue growth in our livestock products and continued discipline around our operating expenses.”

Ackman’s new stake in Zoetis sent share prices soaring after the deal on Tuesday. The transaction fueled speculations that Pershing, Ackman’s hedge fund, would use the new ownership power to pressure Zoetis to sell itself to a larger company. These speculations come on the tails of Ackman’s recent efforts to have Valeant Pharmaceuticals (NYSE: VRX) take over Allergan (NYSE: AGN) another company in which Ackman recently bought stake.

Shares of Zoetis opened at $43.90 on Wednesday, November 12th. The animal health company has a 1-year high of $44.13 and a 1-year low of $28.14. The daily moving average is $43.26 and the 50-day moving average is $37.34. The market cap for Zoetis is $21.37 billion and its P/E ratio is 38.07.

On November 12, Liav Abraham of Citigroup reiterated a Buy rating and raised the price target from $44 to $49. Abraham referred to Ackman’s recent acquisition noting, “We assume that Pershing is interested in advocating for a sale of ZTS, potentially to VRX if its bid for AGN falls through. Apart from VRX, we note that others, including Bayer, could be interested in acquiring the company. We note CFO Paul Herendeen’s commentary on last week’s earnings call, which focused on maximizing shareholder value, while not ruling out a potential sale of the company.” Abraham has an overall success rate of 88% recommending stocks with an average return of +36.8% per recommendation.

Zoetis Analysts

Separately on November 12thChristopher Caponetti from Morgan Stanley received a Hold rating for ZTS. Caponetti has an 80% success rate recommending 5 stocks with an average return of +0.3% per recommendation.

On average, the top analyst consensus for Zoetis is Strong Buy.

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