Zoetis (ZTS) shares surged 5.96% in pre-market trading on Thursday, staging a sharp recovery even as the animal health company slashed its full-year guidance. The counterintuitive rally reflects a stock that had been deeply oversold following a 30% plunge after its first-quarter results, with investors seizing on a marginal earnings beat as a catalyst for a technical rebound.

The company reported second-quarter adjusted earnings per share of $1.87, edging past the consensus estimate of $1.86 and marking a 6.25% increase from the prior year. However, revenue came in at $2.468 billion, missing the $2.502 billion estimate, and management significantly lowered its full-year outlook. Zoetis now expects adjusted EPS of $6.15 to $6.25, down sharply from its prior guidance of $6.85 to $7.00, while the revenue forecast was cut to $9.12 billion to $9.32 billion from $9.68 billion to $9.96 billion. The company cited increased pressure in the companion animal market, reduced clinic visits, and heightened price sensitivity among pet owners.

Despite the sobering guidance, the stock rallied as substantial pessimism had already been priced in. Following the first-quarter results and initial guidance cut in May, Zoetis shares plummeted more than 20% in a single session, and multiple investment banks subsequently reduced their price targets to the $80–$85 range. With the stock trading at deeply oversold levels, the slight EPS beat was enough to spark a recovery, as traders viewed the sell-off as overdone relative to the company's fundamental outlook.