Animal health company Zoetis Inc. (ZTS) reported fourth-quarter results Thursday that technically checked all the right boxes, but the story underneath the numbers has analysts scratching their heads about what comes next.

The company posted adjusted earnings of $1.48 per share for Q4 2025, comfortably ahead of the $1.40 consensus estimate. Revenue came in at $2.387 billion, up 3% year-over-year and essentially matching expectations of $2.36 billion. On an organic operational basis, revenue grew 4%.

Adjusted net income hit $648 million, representing 3% growth on a reported basis and 4% operationally. That figure excludes $45 million in purchase accounting adjustments, acquisition and divestiture-related costs, and certain significant items.

The Geographic Story Gets Complicated

Here's where things get interesting. U.S. segment revenue totaled $1.2 billion, down 2% on a reported basis and flat operationally. Companion animal products dipped 1%, driven by declines in the company's monoclonal antibody treatments for osteoarthritis pain—specifically Librela for dogs and Solensia for cats. Growth in parasiticides and the dermatology franchise partially cushioned that blow.

Livestock products dropped 6% on a reported basis, largely due to divesting the medicated feed additive product portfolio. Strip out that divestiture, and livestock sales actually grew 3% operationally, powered by strong cattle and poultry biologics performance and favorable product supply timing.

"Zoetis delivered solid results in 2025, demonstrating the strength and resilience of our portfolio across species, geographies, and channels," CEO Kristin Peck said in a statement. "Our disciplined execution positions us well as we move into 2026 and lay the groundwork for the next phase of our innovation cycle, supporting sustainable growth and long-term value creation."

Ambitious Guidance, Skeptical Analysts

Zoetis offered 2026 guidance that surprised to the upside, forecasting adjusted earnings between $7.00 and $7.10 per share versus consensus of $6.80. The company expects revenue in the $9.83 billion to $10.03 billion range, bracketing the $9.91 billion Street estimate.

William Blair acknowledged that the above-consensus guidance "could provide some confidence that the fundamentals are troughing soon," particularly given increasing competitive pressures. But analyst Brandon Vazquez highlighted a troubling pattern: key segments like dermatology, parasiticides, and OA pain (mostly Librela) experienced "another step down in growth."

While these decelerations were largely anticipated, William Blair notes they "creates questions about the pathway for improving growth/EPS in 2026, especially since some key competitive launches are still expected in the coming quarters."

In other words, management is projecting confidence, but the product-level trends suggest the road ahead might be bumpier than the guidance implies. Investors seemed willing to give Zoetis the benefit of the doubt for now—shares were up 1.30% at $130.34 Thursday afternoon.