Hello, YieldAlley readers! In this issue:

📈 2026 Guide to the Markets (JP Morgan)

⚡️ The power play behind Hyperion, Mark Zuckerberg’s colossal data center being built in rural Louisiana (Sherwood)

📚 The 10 books financial advisors loved in 2025 (Financial Planning)

🛒 Why tariffs have hit Americans’ jobs harder than their shopping carts (CNN)

🏝️ Should It Be Easier to Buy Annuities in Retirement Plans? Readers Had Doubts (WSJ)

Current Price: ~$127 | Morningstar Fair Value: $171 | Morningstar Rating: ★★★★ | Moat: Wide

Zoetis, the world's largest animal health company with over $9 billion in annual revenue, has fallen 25% over the past year (down from $237 in late 2021) on concerns around Librela, its osteoarthritis treatment for dogs. Social media amplified reports of adverse events including neurological issues and joint degeneration, prompting an FDA "Dear Veterinarian" letter in December 2024 and multiple lawsuits (a federal court dismissed the main class action in late 2025). Librela sales disappointed in 2025 and management acknowledged headwinds will persist into 2026, which explains the selloff.

The broader business continues performing. Q3 2025 revenue grew 4% with the companion animal portfolio (vaccines, diagnostics, dermatology) offsetting Librela weakness, and management raised full-year guidance to $9.4-9.475 billion. Zoetis operates across companion animals (dogs, cats, horses) and livestock (cattle, swine, poultry, fish), selling medicines, vaccines, diagnostics, and precision health products. The company's wide moat stems from R&D innovation across pet-specific treatments and dominant positioning in virtually every animal health category including aquaculture.

The dividend yields 1.6% and was just raised 6% for Q1 2026, continuing an unbroken streak of annual increases. The company trades at a historically low P/E of 20, compared to typical multiples in the mid-20s to low-30s during normal periods. Morningstar's $171 fair value implies 32% upside from current levels. Management has accelerated share buybacks while the stock trades below intrinsic value, with $4.9 billion remaining on a $6 billion authorization. Capital allocation has improved over the past few years, with the company prioritizing R&D and strategic acquisitions rather than overpaying for buybacks at inflated prices like it did earlier in the decade.

The setup is a wide-moat healthcare company with diversified global revenue, consistent dividend growth, and a 32% discount to fair value driven by a single-product controversy. Veterinary care spending has historically proven recession-resistant as pet owners prioritize animal health, and Zoetis maintains pricing power across its portfolio. The Librela issue appears contained to regulatory label updates and controlled messaging rather than a product recall, though ongoing litigation and social media sentiment remain risks. At 20x earnings with a growing 1.6% yield, the valuation reflects an assumption that innovation has stalled when the underlying franchise continues generating consistent cash flow and margin expansion across the rest of the portfolio.

Government Money Market Funds (7-Day Yields)

Brokered CD Rates (6-Month Rate)

ETFs (30-Day Yields)

United Airlines is offering targeted MileagePlus members bonus miles for booking and completing qualifying flights through March 9, 2026. Bonus awards range from 3,000 to 15,000 miles depending on the number of trips and minimum fare requirements in your personalized offer.

Check your specific offer at the registration page since bonus amounts are account-specific. Register before booking to ensure qualification, and remember that basic economy fares can meet minimums if the base fare plus carrier charges reach the threshold despite lower total costs.