Zoetis stock reversed Tuesday, sinking into the red, despite beating second-quarter expectations as Librela sales continued to flounder.
Librela is Zoetis' monoclonal antibody treatment for osteoarthritis. Sales declined in the U.S. amid worries of severe side effects in some dogs. Zoetis told Investor's Business Daily last year that less than 1% of animals who've received its arthritis shots, which also includes Solensia, have experienced side effects.
Still, William Blair analyst Brandon Vazquez expects bears to pick on the Librela decline in the U.S. and the fact Zoetis benefited from a positive exchange rate in the second quarter.
"Our take is that Librela sentiment is already low, so the decline might not matter as much, especially in the context of a total U.S. companion animal beat," he said in a report. "Clearly, momentum is strong enough to offset it."
But, at the close, Zoetis stock fell 3.8% to 146.12. That reversed from a strong premarket gain.
Librela Weighs On Zoetis Stock
Total sales rose 4% to $2.46 billion, just above analysts' forecast for $2.41 billion. Adjusted profit also climbed nearly 13% to $1.76 per share, beating expectations for $1.62, according to FactSet.
Sales of medical treatments for pets — which Zoetis calls companion animals — climbed 8% to $1.79 billion. That beat expectations, Vazquez said.
"Growth in the quarter was driven by broad-based growth across the companion animal portfolio, including Simparica Trio, Apoquel/Apoquel Chewable, and Cytopoint," he said. "Growth was partially offset by declines in OA pain (Librela and Solensia) in the U.S. (but saw growth internationally)."
Livestock sales, on the other hand, slipped 8% to $638 million, though beat forecasts. Vazquez noted the divestiture of a key business contributed to the sales decline. But growth was operationally strong across core species, including pigs, fish, poultry and cattle.
Zoetis raised its outlook for the year and now expects to earn $6.30 to $6.40 per share, up 10 cents at the midpoint from its prior guidance, on $9.45 billion to $9.6 billion in sales. The sales outlook is up $25 million, at the midpoint, from the guidance Zoetis issued three months ago.
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