Stifel Initiates Coverage On Zoetis, Sets $58 Target

Stifel's Jonathan Block initiated coverage on Zoetis Inc (Nyse: ZTS) with a Buy rating and a price target of $58.00.

Block estimated that "worldwide peak sales could reach $400 to $500 million versus management's estimate of > $300 million." He envisions the company will secure 73 percent of the chronic atopic dermatitis market and 50 percent of the acute market within the next 12 months. Satisfaction for the company's products have been overwhelmingly positive with a rating of 5 on a scaled of 1 to 6. Zoetis' products will gain a strong hold on the market in the coming quarters.

The company's free cash flow generation will increase. Pfizer's separation operational efficiency accounted for large expenses in 2015 and will subside considerably, Block stated.

Zoetis is relatively new on the scene, but Block expects fairly large growth in the coming quarters. A "key to the stock's success may be driving 2018 EPS closer to $3.00."

Shares traded recently at $47.76, up 0.7 percent.