Zacks Investment Research downgraded shares of Zoetis Inc. (ZTS) from NEUTRAL to UNDERPERFORM on April 02, 2014, with a target price of $27.00.
We are downgrading Zoetis to Underperform from Neutral following the disappointing guidance issued by the company for 2014. Adjusted earnings are projected in the range of $1.48-$1.54 per share. Following the disappointing guidance issued in Feb 2014, while releasing its fourth quarter results, the Zacks Consensus Estimate has moved down by $0.10 to $1.53 per share. Increased costs will hurt the bottom line. Revenue guidance is also disappointing. The U.S. cattle segment is expected to perform poorly in 2014 thereby putting pressure on gross margin. We remain concerned about Zoetis' high debt levels, which can impact its long-term growth prospects.
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