Overview
- Diamond Hill Capital said Zoetis underperformed the fund after the company reported flat organic revenue and reduced its full-year guidance.
- The firm pointed to weaker U.S. companion-animal demand, fewer veterinary visits, and rising competition as drivers of the sales slowdown.
- Zoetis’s weak results were a material drag on Diamond Hill’s Large Cap Strategy performance, which also suffered from limited exposure to companies benefiting from AI-related capital spending.
- Zoetis shares trade far below year-ago levels and its market capitalization sits near $32.4 billion, while hedge fund ownership of the stock has declined between quarters.
- The note signals investors should watch upcoming earnings and pipeline milestones for signs that new products can close the expected near-term earnings gap and restore growth.