Fortune.com recently reported that artificial intelligence (AI) is helping the pet care industry cope with a chronic veterinary shortage. AI use cases could become far more prevalent for pets than humans in the near term due to fewer impediments such as privacy laws. That’s excellent news for AI pet stocks.
Indeed, animal health innovation is accelerating in 2024. As an investor, it pays to be aware of trends in this consistently growing industry. The pet sector came into its own during the pandemic. Now post-pandemic, it’s faced growing pains as pet owners went back to a more active lifestyle with less time for their animals.
So, who are the companies leading the way in pet care innovation? Among many possibilities, three stand out.
Zoetis (ZTS)
Zoetis (NYSE:ZTS) stock is down 21% from its December 52-week high of $201.92 and 18% from its December 2021 all-time high of $247.03. It has lost a lot of ground in the past 40 months.
Fortune.com points out that Zoetis has an AI-powered device to check samples for various diseases and conditions. It’s called Vetscan Imagyst, and it looks a little like a small microscope. The ZTS website states that it provides “a first-of-its-kind technology, offering AI blood smear, AI fecal, and digital cytology image transfer in a single platform.”
Providing vets with products that can help them diagnose a pet’s issues more quickly can be a lifesaver. In a sponsored article for DVM360, Zoetis said the following about its diagnostics product.
“The Zoetis Vetscan Imagyst is an in-clinic, multi-use platform that uses deep learning AI and digital microscopy solutions to help diagnose patients within hours or even minutes. Although a practitioner may have a diagnosis in mind, having the technology to back up their opinion can be beneficial.”
With 17 of the 19 analysts covering Zoetis stock rating it a buy, with a $224 target price, ZTS looks ready to retest $200 in the next 12-18 months.
Idexx Laboratories (IDXX)
Idexx Laboratories (NASDAQ:IDXX) has a product called IDEXX DecisionIQ that helps vets comb through research, patient histories, online forums and other vital information when assessing the appropriate course of action for treating a pet.
“DEXX DecisionIQ leverages artificial intelligence with patient-specific data to identify subtle patterns in routine diagnostic testing, allowing for the detection of current or developing disease,” states the company’s website.
The website provides a case study of a 9-year-old Labrador retriever, Toby, whose face started swelling. The dog’s blood work revealed patterns suggesting an increased likelihood of Addison’s disease.
“Based on the normal electrolytes and reported lack of clinical signs, IDEXX DecisionIQ recommended screening with a resting cortisol to be followed by an ACTH stimulation test if indicated based on the results,” stated the case study.
The diagnosis initially led the vet to recommend dental surgery. However, the IDEXX DecisionIQ findings postponed surgery until the dog was healthy enough to receive an anesthetic.
Furthermore, AI innovation will enable Idexx Laboratories to charge more for its products and services in the future.
Nestle (NSRGY)
Nestle (OTCMKTS:NSRGY) has a market capitalization is about 2.3 times that of Zoetis and Idexx combined. Yet, the Swiss company’s pet care business sometimes gets lost in its myriad of operating segments.
The Fortune piece quotes Nestle Purina Petcare North Chief Executive Officer (CEO) Nina Leigh Kruger, who discusses the company’s pet health monitoring products.
The Petitivity-connected system sits below a normal litter box and tracks a pet’s bathroom behavior. The system uses AI algorithms to understand each cat’s unique behavior. Given that cats can be clever at hiding health issues from their pet owners, many consumers would buy this if there weren’t any concerns about price.
Moreover, Petivity is one of many revenue generators for Nestle’s pet care division, which accounted for 20% of its 93 billion Swiss francs ($101.24 billion) revenue in 2023. It was the second-highest contributor behind only powdered and liquid beverages such as Nescafé, Nespresso, Starbucks and Milo.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
