<div id="readability-page-1"><div> <h2>Key Points</h2><ul><li>Zoetis delivered sales and adjusted earnings per share growth of 3% and 9%, which was below analysts' expectations.</li><li>Worse yet, its guidance for 2026 was also weak, as pet owners may be hitting a ceiling on how much they can afford to pay to help their furry friends.</li><li>An 8% decline in U.S. pet healthcare sales in Q1 may suggest that demand for Zoetis's products is less inelastic than once thought.</li><li>10 stocks we like better than Zoetis ›</li></ul>Shares of leading pet and livestock healthcare specialist Zoetis (NYSE: ZTS) are down 20% as of 1:30 p.m. ET on Thursday after the company delivered substandard earnings. The company's Q1 sales inched up 3% to meet analysts' expectations, but adjusted earnings per share rose 9%, well short of Wall Street's expectations. Worse yet, management's guidance for &#34;organic operational&#34; revenue and adjusted earnings-per-share growth of 3.5% and 4% at the midpoint in 2026 also fell short of the market's consensus.Long viewed as a &#34;recession-proof&#34; investment by many -- including me, with Zoetis as a core holding -- the company's Q1 results suggest that petcare spending in the U.S. may be more sensitive to macroeconomic financial pressures than previously thought. Chief Executive Officer Kristen Peck touched on this topic, explaining, &#34;Pet owners demonstrated increased price sensitivity with softer demand for premium products in preventative and chronic care, where Zoetis leads amid a more cautious spending environment.&#34; Said another way, this premium positioning is not a selling point for pet owners with stretched budgets, given the wide array of macroeconomic pressures they face.Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an &#34;Indispensable Monopoly&#34; providing the critical technology Nvidia and Intel both need. Continue »<img src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-dXJsPWh0dHBzOi8vZy5mb29sY2RuLmNvbS9lZGl0b3JpYWwvaW1hZ2VzLzg2OTEyNy9nZXR0eWltYWdlcy0xNTE2MjM5NDUwLTEuanBnJnc9NzAw?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="700" height="466" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-dXJsPWh0dHBzOi8vZy5mb29sY2RuLmNvbS9lZGl0b3JpYWwvaW1hZ2VzLzg2OTEyNy9nZXR0eWltYWdlcy0xNTE2MjM5NDUwLTEuanBnJnc9NzAw"/>Image source: Getty Images. This shift is a markedly different reaction from pet owners than the nearly recession-proof demand Zoetis previously implied in investor presentations, where it pointed to the &#34;humanization of pets&#34; as an unwavering megatrend. There may now be cracks in this notion -- or at least a K-shaped split among pet owners willing to spend on non-emergency healthcare treatments. That said, while Zoetis saw increasing competition and softer demand, as its U.S. pet segment's revenue declined 11%, its livestock and international sales grew 12% and 10%, respectively.Looking ahead, Zoetis will need to lean upon its innovation engine to create the next wave of its growth, but that won't be an overnight development. Expected approvals for a long-lasting Cytopoint (anti-itch medicine for dogs) treatment and next-gen chemistry diagnostics could help boost results in the near term, but Zoetis has a lot of work ahead. Trading at 13 times forward earnings, I'll probably buy Zoetis one more time and just hold it for the long term.<h2>Should you buy stock in Zoetis right now?</h2> Before you buy stock in Zoetis, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Zoetis wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $476,034!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,274,109!* Now, it’s worth noting Stock Advisor’s total average return is 974% — a market-crushing outperformance compared to 206% for the S&amp;P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of May 7, 2026. Josh Kohn-Lindquist has positions in Zoetis. The Motley Fool has positions in and recommends Zoetis. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. </div></div>

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Shares of Zoetis (NYSE: ZTS) fell 20% after the company reported Q1 sales growth of 3% and adjusted earnings per share growth of 9%, both below analysts' expectations. The company's weak guidance for 2026 indicates that pet owners may be more price-sensitive, impacting demand for premium products. Additionally, an 8% decline in U.S. pet healthcare sales suggests a shift in consumer spending behavior. Despite growth in livestock and international sales, Zoetis faces challenges ahead and will need to innovate to drive future growth.

Why Zoetis Shares Plummeted Today