Zoetis, Inc. (ZTS) is engaged in the discovery, development, manufacture and commercialization of animal health medicines and vaccines, with a focus on both livestock and companion animals across the Americas, Europe, Africa and Asia. The stock is currently trading around $48.71 at the upper end of its 52 week range of $31.67-$55.38. The stock has been out performing the market this year rallying 13.18% year to date. ZTS is scheduled to report earnings before the opening bell tomorrow, and the stock is down $0.26 or 0.53% on the session ahead of the close.
Over the past 8 quarters ZTS has rallied on earnings day 3 times with an average move of 2.01%. The stock appears bullish on a chart going into the release having traded above the Ichimoku Cloud and diving to trade below the cloud in the past month on the daily bars. Over the past 8 quarters ZTS has rallied on earnings day to the nearest expiration 4 times with an average move of 2.58%. Investors are mainly watching to see how the company performs after the acquisition of Abbott Laboratories. With the stock trading below the cloud, bad earnings history and a strengthening acquisition it is hard to justify anything but a short position in ZTS.
The options market is currently implying a move of around $2.73 or 5.6% in ZTS by the end of this week giving us targets of $45.98 and $51.44.
Trade: Buy this week’s 47.5-46 Vertical put spread for $0.45
Risk: $0.45
Reward: $105
Break Even: $47.05
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