Zoetis shares are off and running this morning, on their first day of trading, and they’ve already surged 20 percent. The company is a spinoff of Pfizer Inc. (NYSE:PFE), and the stock opened at $31.50, quite a bit above the expected IPO of $22 to $25 per share and even higher than the actual IPO price of $26 per share.


With the current valuation, Zoetis is worth about $13 billion on its opening day at the New York Stock Exchange. The company’s IPO is the largest one since Facebook Inc (NASDAQ:FB)’s IPO back in May. Zoetis is the company that resulted from Pfizer spinning off its animal health business.

Today, analysts at BMO Capital Markets issued a brief report on shares of Pfizer Inc. (NYSE:PFE) and Zoetis. They see the spinoff as “positive” for Pfizer shareholders. The current valuation of Zoetis is well above their previous estimation of Pfizer’s animal health business, which was between $10.5 and 12 billion. They also believe that Pfizer will “make a tax-free distribution” for the remaining 80 percent of Zoetis sometime in the second half of 2013 or in early 2014.

At that point they believe Pfizer Inc. (NYSE:PFE) shareholders will be able to exchange their shares for shares of Zoetis tax-free and “at a discount” if they desire to do so. Thus they expect that “Pfizer will emerge from the Zoetis separation with a more leveraged” profit and loss statement. BMO Capital analysts are maintaining their Outperform rating and $31 price target on shares of Pfizer. The stock rose more than 1 percent in afternoon trading, Friday.

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