Paul Lountzis presented his in-depth investment thesis on Zoetis (NYSE: ZTS) at Wide-Moat Investing Summit 2014.
Zoetis: Recent spin-off from Pfizer and the global #1 animal health provider serving the livestock (64% of revenue) and companion animal (34% of revenue) markets. Sources of moat: 1) 3,500+ member field force; 2) R&D and manufacturing capabilities; and 3) global regulatory expertise. Experiencing some difficulties due to the separation from Pfizer (creation and implementation of various internal departments; substantial costs to becoming an independent company) that lead current financials to understate true earning power. Lountzis estimates revenue growth of 5-6% and EPS growth of 8-12% over the next few years, implying EPS of $1.94 in 2016, which is more reflective of underlying earning power. Given market share leadership in a growing global category (benefits from population growth, increasing protein consumption and rising global middle class), Lountzis finds the ~6% earnings yield attractive.
About the instructor:
Paul Lountzis founded Lountzis Asset Management, LLC in October 2000. He has more than 25 years experience in the investment industry, beginning his career with Royce & Associates, a New York City-based investment advisory firm managing the Royce Mutual Funds. Paul spent nine years, with the last five as a partner at Ruane, Cunniff & Goldfarb, Inc. an investment advisory firm managing more than $9 billion including the Sequoia Mutual Fund. While at Ruane, Cunniff & Goldfarb, Inc., Paul also evaluated several companies for Warren Buffett.
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