Zoetis (NYSE:ZTS) — the animal health division of Pfizer (NYSE:PFE) — raised $2.2 billion in its initial public offering today, making it the biggest IPO since Facebook (NASDAQ:FB) in May 2012.
Unlike Facebook, Zoetis doesn’t appear to be tripping out of the gate.
Zoetis’ deal priced at $26 after an initial range of $22-$25, and shares are up another 18% so far in Friday’s trading, giving it a current market value of around $13 billion.
Zoetis is the No. 1 player in the animal health category and boasts more than 300 vaccines and drugs. However, its size might be helping to mute its growth, as revenues increased by only 1.7% (to $3.16 billion) in the first nine months of 2012. Operating income was promising, though, surging 75% to $636 million.
Going forward, Zoetis — which has a strong focus on treatments for livestock — should get traction in emerging markets because of the growth in protein-based diets.
Zoetis also has some competitive advantages, such as its global infrastructure (with a presence in 120 countries) and a 3,400-head sales force. It also has little competition from generic alternatives, does not need federal reimbursement and has a strong R&D arm.
Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “How to Create the Next Facebook” and “High-Profit IPO Strategies: Finding Breakout IPOs for Investors and Traders.” Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.
A long-time follower of the IPO scene, back in 1999 Tom started one of the first sites in the space called WebIPO. It was a place where investors got research as well as access to deals for the dot-com boom. Tom also wrote the top-selling book, Investing in IPOs. In it, he covers all the aspects of analyzing an IPO, such as reading the prospectus, detecting the risk factors and understanding some of the arcane regulations. But don’t worry — if that process is too intimidating for you, thankfully Tom will do the legwork for you right here in the IPO Playbook blog.
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