Zoetis Battles Dual Headwinds as US Pet Market Sags and Legal Scrutiny Mounts

Zoetis faces securities investigation after cutting 2026 guidance, as US companion animal sales slump 11% on generic competition and pet spending pullback.

The animal health giant Zoetis is under fire from two directions. Just days after slashing its full-year outlook, the company now faces a securities investigation over whether it properly disclosed the severity of the downturn in its core US companion animal business. Shares have plunged to levels not seen in months, wiping out billions in market value.

At the heart of the problem is a sharp pullback in spending on pets across the United States. Total US revenue fell 8% in the first quarter, but the damage was even more concentrated in the companion animal division, where sales slid 11%. The decline is driven by price-sensitive owners delaying vet visits and a surge in generic competition hitting two key products: the antibiotic Convenia and the anti-nausea drug Cerenia. Both have been reliable profit engines for Zoetis, and their erosion is compounding the pressure from weaker demand.

Zoetis reported first-quarter revenue of $2.3 billion, up 3% from a year earlier, but organic growth was flat on a currency-adjusted basis. Net income came in at $601 million, while adjusted earnings per share reached $1.53. The headline numbers looked passable, but the underlying quality of growth deteriorated. On May 10, the company cut its guidance for 2026, now expecting revenue between $9.68 billion and $9.96 billion, with organic growth in the low to mid-single digits. Adjusted EPS is forecast at $6.85 to $7.00, and net income at $2.68 billion to $2.76 billion.

The market’s reaction has been brutal. In the week immediately following the guidance cut, the stock tumbled 26.44%. The selling intensified last week, with shares losing another leg to bring the weekly decline to 32.45%. On Monday, Zoetis closed at €65.10, down 7.63% on the day, compared with €70.90 a week earlier. Year to date, the stock is off 34.02%, and over the past twelve months it has shed 51.44%. The current price sits more than 50% below its 52-week high and well under the key moving averages.

The rout has prompted several analysts to recalibrate their targets. JPMorgan cut its price objective from $190 to $130 while maintaining an Overweight rating. UBS lowered its target from $130 to $99 and stayed at Neutral. Meanwhile, a Seeking Alpha analyst downgraded the stock to Hold, flagging patent risks as generics continue to encroach. The consensus target still stands at $141.25, implying that the market expects a recovery – but only if Zoetis can prove the deterioration is temporary.

Adding to the unease, law firm Ademi LLP has launched an investigation into whether Zoetis violated securities laws by failing to disclose the negative trends in the US pet segment in a timely and complete manner. While no charges have been filed, the probe adds an extra layer of uncertainty. Investor confidence has also been shaken: UNIVEST FINANCIAL Corp reduced its stake by 37%, selling 17,873 shares and leaving a holding of 30,384 shares worth roughly $3.82 million.

Not all news is bleak. Outside the US, revenue jumped 17% in the first quarter, and the livestock business grew 12%. These bright spots provide a buffer but cannot offset the drag from the largest profit pool. For now, all eyes are on the US companion animal market. If vet visits and pricing stabilize, Zoetis can lean on its international momentum. If competitive and demand pressures persist, this guidance cut may not be the last, and the legal questions will only grow louder.