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Zoetis Inc (ZTS): Should Investors Buy This Animal Health Company Now?

For the full year 2013, IDEXX expects to increase its revenue by around 7% or more to a range of $1.38 billion – $1.39 billion, with organic growth staying around 7.5% to 8%. EPS is estimated to come in at $3.40 to $3.46 per share. What might make investors like IDEXX is its recent share buyback authorization. In the middle of May, IDEXX planned to repurchase an additional 4 million shares, in additional to 2.22 million shares remaining under the existing share repurchase program. The share buyback could ultimately boost the company’s EPS and push up the share price in the near future.

VCA Antech is the cheapest among the three companies. At $25.10 per share, VCA is worth around $2.25 billion on the market. The market values VCA at only 9.2 times its trailing EBITDA. The company could be considered a leader of animal healthcare in the U.S. and Canada, providing different veterinary services and diagnostics testing, operating in two main business segments: Animal Hospital and Laboratory.

VCA operates 604 animal hospitals with more than 3,100 doctors; treating more than 2.5 million pets with more than 6.6 million annual pet visits. For the full year, VCA expects to generate around $1.82 billion to $1.85 billion in revenue with adjusted EPS staying in the range of $1.59 to $1.69. VCA recently authorized a new share buyback program to buy back up to $125 million of the company’s shares on the open market.

My Foolish take

Zoetis Inc (NYSE:ZTS), with a global leading position in the animal health industry, seems to deserve the higher premium compared to its much smaller peers. The growing middle class, with the increasing demand for milk and meat, could be an opportunity for growth for the company’s livestock business. Indeed, Zoetis could be considered a stock for healthcare investors to buy and hold for the long run. However, with an expensive price tag, I would rather wait for a lower price to grab the company’s shares.

Anh HOANG has no position in any stocks mentioned. The Motley Fool recommends VCA Antech.

The article Should Investors Buy This Animal Health Company Now? originally appeared on Fool.com.

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