Shares of Zoetis Inc. tumbled approximately 20% in Thursday afternoon trading, dropping to $88.44, after the animal health company lowered its full-year forecast and missed first-quarter earnings expectations. The sharp decline reflects growing concerns about softening demand in the U.S. pet health market, a segment that had previously been a reliable growth driver.
For the first quarter, Zoetis reported adjusted earnings of $1.53 per share, falling short of the $1.61 consensus estimate from analysts surveyed by LSEG. Revenue came in at $2.31 billion, slightly below expectations. On an organic operational basis—excluding acquisitions and currency effects—sales were essentially flat compared to the prior year, despite a reported 3% increase to $2.262 billion.
The company now expects 2026 adjusted earnings in the range of $6.85 to $7.00 per share, down from its February forecast of $7.00 to $7.10. Revenue guidance was also trimmed to $9.680 billion to $9.960 billion, compared with the prior range of $9.825 billion to $10.025 billion.
The weakness was most pronounced in Zoetis’ U.S. companion-animal segment. U.S. revenue declined 8% to $1.1 billion, with sales of pet products falling 11%. Key products, including the dermatology portfolio and the parasiticide Simparica Trio, lost ground to competitors. Convenia and Cerenia faced generic pressure, and Librela, an antibody treatment for canine osteoarthritis pain, saw weaker sales.
CEO Kristin Peck acknowledged that the first quarter proved more challenging than anticipated. “Increased price sensitivity” among pet owners, along with heightened competition in dermatology and parasiticide markets, weighed on results. Peck noted that competitors are maintaining aggressive pricing and incentive strategies longer than expected, prompting Zoetis to ramp up direct-to-consumer marketing and strengthen partnerships with veterinarians to stimulate demand.
International revenue provided some offset, climbing 17% to $1.1 billion, driven by stronger demand in both livestock and companion animals. However, the gain was partly inflated by a fiscal-year alignment change that added about $100 million in revenue for the quarter. Without that adjustment, international growth would have been more modest.
The broader pet health sector also felt the pressure. Shares of Elanco Animal Health fell roughly 9%, while IDEXX Laboratories, a veterinary diagnostics firm, slipped about 1% in afternoon trading. The declines highlight growing investor unease about the sustainability of premium pet care spending.
Analysts expressed caution about the outlook. Leerink Partners’ Daniel Clark noted that U.S. companion-animal sales missed by a wide margin, citing stiff competition and price-sensitive customers. If clinic traffic remains sluggish or rivals continue aggressive pricing, further guidance cuts could follow, the company warned.
Looking ahead, Zoetis continues to emphasize its pipeline, with more than a dozen candidates each capable of generating at least $100 million in annual revenue. The planned acquisition of Neogen’s animal genomics business remains on track for the second half of 2026. However, the immediate question for investors is whether pet owners will return to veterinary clinics and how much they are willing to spend on premium treatments.