Spending on Livestock a Boon for Zoetis Inc (ZTS)

December 4, 2014

Eric Kuby, Chief Investment Officer of North Star Investment Management Corporation, says it is livestock, not domestic pets, that is driving growth for Zoetis Inc (ZTS). That trend is one of the reasons he favors the stock.

“Globally, there is greater and greater demand for food, and the health of those livestock becomes more and more important,” Kuby says. “This is a huge global growth industry. And again, the theme there is just an improving global economy with more and more consumers of food.”

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Kuby says he has been intrigued by Zoetis since its spinoff from Pfizer Inc. (PFE). Now, as Zoetis has moved away from a shared expense model with Pfizer, he thinks there is an opportunity for Zoetis to operate more efficiently.

“So we thought that there is some nice earnings leverage and greater visibility coming,” Kuby says. “Over the last six months, more and more institutions have discovered the company, and it has been performing quite nicely. Spinoffs in general often offer these sorts of opportunities.”