ZTS
Zoetis Inc.
$81.32
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Fair Value
Trading 17.5% below fair value
You pay
$81.32
Bear
$84.48
Fair
$98.56
Bull
$112.65
Bear
$84.48
+3.9%
$6.21 × 12x P/E
Fair
$98.56
+21.2%
$6.21 × 14x P/E
Bull
$112.65
+38.5%
$6.21 × 16x P/E
Key Value Driver
Normalized P/E multiple (14x base case)
Implied Market Multiple
13.1x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $125.71 from 30 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $98.56 per share.
Warnings
Wall Street's average price target is $125.71 (from 30 analysts). Our estimate is 31% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples