Zoetis (NYSE:ZTS) lowered expectations for 2020 in May because of the coronavirus pandemic. But the animal health company's shares didn't perform below expectations. Its stock is up more than 20% over the last three months.

That momentum seems likely to continue. Zoetis announced its second-quarter results before the market opened on Thursday. Here are the highlights from the company's Q2 update.

Smiling female veterinarian with dog licking her face.

Image source: Getty Images.

By the numbers

Zoetis reported revenue in the second quarter of $1.5 billion, flat compared with its revenue in the prior-year period. But this result still topped the consensus Wall Street Q2 revenue estimate of $1.36 billion.

The company announced net income in Q2 of $377 million, or $0.79 per share, based on generally accepted accounting principles (GAAP). This reflected modest improvement from GAAP earnings of $371 million, or $0.77 per share, posted in the same quarter of 2019. Zoetis recorded adjusted earnings of $427 million, or $0.89 per share. While this was down slightly from adjusted earnings of $436 million, or $0.90 per share, in the prior-year period, it handily beat the average analysts' earnings estimate of $0.64 per share.

Behind the numbers

The U.S. market served as a bright spot for Zoetis in the second quarter. U.S. revenue rose 6% year over year to $832 million. The company reported that sales for its companion-animal products jumped 19% thanks largely to higher demand for its Simparica brands. The company's recent acquisitions of Platinum Performance and several regional diagnostic reference labs also contributed to the U.S. revenue growth. But U.S. livestock-products revenue sank 18% year over year. 

International sales fell 5% year over year to $708 million. Foreign exchange fluctuations made a big difference, though. On a constant-currency basis, the company's international revenue increased by 3%. Several brands performed pretty well in Q2, including Apoquel and Cytopoint dermatology products. Zoetis' companion-animal products business in China also grew rapidly in the second quarter.

The coronavirus pandemic did hurt Zoetis in Q2, however. The shift from U.S. consumers dining out to eating at home affected producer profitability and disrupted the food supply chain to some extent. Visits to veterinary clinics fell in some European and Latin American markets, weighing on growth for companion-animal product sales.

Looking ahead

Zoetis now anticipates revenue of $6.3 billion to $6.475 billion in full-year 2020, up from its previous guidance of $5.95 billion to $6.25 billion. The company also projects 2020 earnings per share of $3.14 to $3.32, compared to $2.80 to $3.07 provided in its previous outlook. Adjusted EPS is expected to be between $3.52 and $3.68, up from the previous guidance of $3.17 to $3.42.

CEO Kristin Peck said that the company's higher full-year guidance reflects an improved outlook. She stated that Zoetis expects "overall revenue growth for the remainder of the year to be driven largely by companion animal products, especially parasiticides and our key dermatology portfolio." How the pandemic will impact markets remains the biggest question mark for the healthcare stock, though.

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