Homebound families are spending more time and money on pets, Zoetis CEO says
Pet ownership rates rose during the coronavirus pandemic, creating a strong growth driver for the animal industry overall, Zoetis CEO Kristin Peck told CNBC's Jim Cramer on Wednesday.
As Americans began spending more time at home last year, pet adoptions rose 15% year over year accompanied by additional spending on food and supplies, she said.
"It has been great for our business," said Peck, who appeared in a "Mad Money" interview.
With many families working and learning from home, pets are also getting more facetime with their owners than ever before, making it easier to spot health and other issues.
"They're noticing more, and those pets are getting taken care of much better than ever before," she said. "They're noticing that itching or the need for preventatives, so it has been a real strong growth driver for the industry overall."
Zoetis is a U.S. pharmaceutical manufacturer, a leader in the animal health sector commanding a $78.95 billion market cap. Business for the pet medicine provider, which sells prescriptions to veterinarians, has grown at least 7% in the past three years, leading to $6.26 billion of revenue in 2019.
Growth took a hit in the first three quarters of 2020 as the coronavirus pandemic disrupted U.S. businesses and the economy, though Zoetis posted double-digit growth in the most recent quarterly report. Through the first nine months of the coronavirus-plagued year, revenue was up 6% from a year ago, according to FactSet.
Zoetis is set to report full results from 2020 in mid-February. According to FactSet estimates, analysts project revenue to come in more than 5% higher than the year prior.
"I still think we're probably one of the largest, best-performing companies that nobody's ever heard of," Peck said.
Two in three American families, or 67%, owned pets in 2019, up from 56% in the late 1980s, according to the American Pet Products Association. The organization says that Americans spent $95.7 billion on pets in 2019, up nearly 6% from 2018. The 2020 figure is projected to be $99 billion.
Pet food sales was the leading category in the industry, representing about 38% of spending in 2019. Expenses on vet care and supplies, where Zoetis does business, was the second-largest category, making up 30% of industry sales.
Zoetis shares fell 2.5% in Wednesday's session to close at $161.95. The stock posted gains of 25% in 2020.
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