Zoetis heads into its May 7 Q1 results with options traders markedly more defensive than they have been all year.
The sharpest shift is in options positioning. The put/call ratio has climbed to 0.59, almost two standard deviations above its 20-day average of 0.41, making it one of the most defensive readings of the past twelve months against a 52-week range that bottoms out near zero. That tilt toward puts has arrived as the stock has slipped roughly 3.4% over the past month to close at $114.16 — leaving it down around 2.3% on the week and near its weakest levels of the recent period.
Short interest, by contrast, tells a distinctly less aggressive story. Bears have been retreating: SI % of free float has fallen from around 4.2% in late March to 3.2% now — a drop of more than 22% in a month and 11.5% in a single week. Borrow is essentially free at under 0.5% annualised, and availability remains ample, so there is no squeeze dynamic building in the lending market. The short score has also eased from 39.5 to 35.9 over the past two weeks, consistent with short sellers stepping back rather than pressing a bearish thesis.
The debate between bulls and bears centres on competitive durability. The bull case rests on Zoetis's dominant position in animal health — spanning both companion and production animals — and the steady long-term demand tailwind from rising pet ownership and emerging-market protein consumption. The mean analyst price target of $148.88 implies roughly 30% upside from current levels, and Citigroup initiated coverage with a Buy and a $145 target in mid-April, while Morgan Stanley holds an Overweight. Bears, however, flag product-concentration risk — a handful of top sellers generate a disproportionate share of revenue — alongside pricing pressure from well-capitalised competitors and the risk that new entrants cannibalize marquee dermatology and pain franchises. UBS trimmed its target to $130 last week while keeping a Neutral, reflecting that more cautious posture.
The earnings report will test whether the companion animal segment has held up through the first quarter and whether management's revenue mix can support a valuation still trading at roughly 16x earnings — a multiple that has compressed about 4% over the past month even after the stock's pullback.
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