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    How Zoetis’ US$1.75 Billion Convertible Notes For Buybacks Could Shape ZTS Investors’ Outlook

    Simply Wall St·12/19/2025 01:29:09
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    • Earlier this week, Zoetis completed a US$1.75 billion Rule 144A offering of 0.25% senior unsecured convertible notes due June 15, 2029, primarily to fund share repurchases and capped call transactions, following a 6% first-quarter 2026 dividend increase and recent product progress in feline osteoarthritis pain management.
    • This combination of low-cost convertible financing, incremental cash returns to shareholders, and portfolio expansion in long-acting biologics for cats adds fresh context to Zoetis’s pre-existing growth and capital allocation narrative.
    • Now we’ll examine how Zoetis’s US$1.75 billion convertible notes issuance to fund buybacks may influence its longer-term investment narrative.

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    Zoetis Investment Narrative Recap

    To own Zoetis, you need to believe in steady, innovation-led demand for animal health treatments and disciplined capital allocation. The new US$1.75 billion, 0.25% convertible notes, largely aimed at buybacks and capped calls, look more like balance sheet and capital return housekeeping than a change to the near term story, where product adoption in osteoarthritis pain and competitive pressure in key franchises remain the main swing factors.

    Among the recent updates, Health Canada’s approval of Portela for long acting feline OA pain relief is most relevant, as it reinforces Zoetis’s push in biologics for chronic pain. While this broadens the OA portfolio alongside Solensia, it also increases the importance of execution in pain management at a time when parts of the OA franchise have already faced adoption and perception challenges.

    Yet behind the attractive buybacks and new OA products, investors should also be aware that...

    Read the full narrative on Zoetis (it's free!)

    Zoetis' narrative projects $10.9 billion revenue and $3.2 billion earnings by 2028. This requires 5.2% yearly revenue growth and an earnings increase of about $0.6 billion from $2.6 billion today.

    Uncover how Zoetis' forecasts yield a $169.96 fair value, a 38% upside to its current price.

    Exploring Other Perspectives

    ZTS 1-Year Stock Price Chart
    ZTS 1-Year Stock Price Chart

    Nine fair value estimates from the Simply Wall St Community span about US$146 to US$200 per share, reflecting very different expectations. Against that spread, Zoetis’s heavier use of low cost convertible debt and reliance on continued product innovation may shape how its performance actually unfolds over time, so it helps to review several of these viewpoints before forming a view.

    Explore 9 other fair value estimates on Zoetis - why the stock might be worth just $146.00!

    Build Your Own Zoetis Narrative

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    This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.