ZTS is drifting near the floor of its post-earnings collapse, and the question this week is whether the analyst community has finished cutting or has more room to go.
The stock closed at $76.39 on June 2, down nearly 5% on the week and 33% from a month ago. That month-long decline reflects the aftermath of the May 7 earnings shock — a 25.5% single-day drop that reset the stock's valuation framework entirely. The week's modest additional slide suggests sellers haven't fully exhausted themselves, even as the shares trade in territory that prompted director buying just three weeks ago.
The analyst response to that reset has been swift and largely one-directional. Argus Research downgraded to Hold on May 27 — the most recent action — pulling another buy-side voice from the bull camp. That follows a wave of target cuts in the preceding weeks: Stifel lowered its target from $105 to $95 on May 22; Citi trimmed from $145 to $112 on May 18 despite keeping its Buy rating; and JP Morgan slashed from $190 to $130 while maintaining Overweight. The consensus has drifted to a Hold, with 8 buys against 9 holds as of late May. Even the bulls are working with revised expectations — the mean target across those with positive ratings implies meaningful upside from current levels, but after a series of post-earnings revisions, those targets carry less conviction than they did a month ago. The stock's P/E multiple has compressed sharply, down roughly 4.9 points over 30 days to 10.7x. Price-to-book has fallen by 2.8 points to 7.6x over the same stretch. The market is repricing the growth premium that ZTS once commanded.
Short positioning tells a quieter story. Short interest is 3.0% of the free float — meaningful but not extreme, and barely changed over the week. The borrow market is effectively wide open: availability is running at over 5,600% of short interest, meaning there are vastly more shares available to lend than are currently borrowed. Cost to borrow is 0.51%, low by any measure, even after a 37% rise over the past week. That week-on-week move in borrow cost is worth noting — it has climbed from around 0.37% to above 0.50% — but it remains well within the range of a routine rate fluctuation rather than a sign of a tightening squeeze. The ORTEX short score is 33.6, stable and unremarkable. Nothing in the lending market suggests a crowded short book or squeeze pressure building.
Options positioning is similarly muted. The put/call ratio is 0.54, only modestly above its 20-day average of 0.50, with a z-score of just 0.47. There is no unusual demand for downside protection relative to recent history, which is a notable contrast given the stock's violent recent moves. Peers have had a rough week too — PAHC dropped 15.3% on the week, and GSK and HLN both fell more than 5%. ELAN was the exception, adding 3.5%. The weakness in ZTS is not happening in isolation, but the magnitude of its trailing-month decline remains in a different category from its correlated peers.
The next earnings event is scheduled for August 5. Between now and then, the key variable is whether the Street's target reductions have run their course, or whether further estimate revisions — the 30-day EPS momentum factor scores at just 37 — prompt another round of cuts that pushes consensus targets closer to where the stock already trades.
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