Zoetis Inc.

Shortcut’s reasoning.

FY26 guidance (6-Aug-26: revenue $9.12-9.32bn, adj. EPS $6.15-6.25, adj. COGS ~29.0%) less 1H26 actuals implies 2H revenue ~$4.49bn and adj. EPS ~$2.80; on 2025's Q3 share of 2H this points to ~$1.50, and the FYA calendar shift (no Nov pre-price-increase buying in 4Q26) tilts 2H earnings toward Q3.

Bottom-up: U.S. companion animal -15% organic (deeper gross-to-net promotions in Q3, U.S. clinical visits -1.9% in Q3, weak parasiticide demand), U.S. livestock +5% (mgmt: 2H mid-single digit), International +4-5% organic with ~+1% FX => revenue $2,307m vs $2,302m consensus.

Adjusted gross margin 70.1% (guide-implied 2H ~69.6%, Q3 seasonally better than Q4), adj. SG&A $580m and R&D $180m (cost programme), interest/other $59m, 20.5% tax => adjusted NI $631m.

Diluted shares 412.7m: 414.15m outstanding at 30-Jun, 413.22m at 31-Jul (10-Q cover), ~$250m Q3 buyback; consensus data's implied 421.0m share count is stale, so consensus NI ($636m) and EPS ($1.51) are not internally consistent.

Management said on 14-Sep-26 the quarter was 'playing out largely as expected' and reiterated guidance; no pre-announcement in EDGAR through the cutoff. Merck Animal Health +3% ex-FX in 3Q26 shows the market is soft but not collapsing.

Starting beat probability 0.80 (large-cap/S&P 500 prior 0.78, 5 beats in 6) cut to 0.70 because the model edge (~$0.02) is small relative to ~$0.05 estimate dispersion after a volatile 2026 (1Q26 miss, two guidance cuts).