Charles River Laboratories Faces Challenges Amidste Earnings Upswing
Charles River Laboratories International, Inc. (CRL), based in Wilmington, Massachusetts, is a key player in the early-stage contract research organization sector. The company specializes in drug discovery, non-clinical development, and safety testing services. With a market capitalization of $10.2 billion, CRL supports pharmaceutical and biotechnology firms, government bodies, and top academic institutions around the world in advancing their research and drug development initiatives.
However, over the past 52 weeks, CRL’s stock performance has lagged significantly behind the broader market. The company’s shares have increased by only 2.5%, in contrast to the S&P 500 Index ($SPX), which has surged by 31.8%. Furthermore, year-to-date, the stock has dropped 15.6%, while the SPX boasts gains of 25.8%.
A closer look reveals a stark comparison to the Health Care Select Sector SPDR Fund (XLV), which has gained 12.8% over the same period and nearly 7.8% year-to-date.
On November 6, CRL shares jumped 13.5% following a better-than-expected release of its Q3 earnings. The company posted revenues of $1.01 billion, a slight 1.6% decrease from the previous year, yet it surpassed Wall Street’s expectations of $977.2 million. Although its adjusted earnings per share (EPS) fell 4.8% year-over-year to $2.59, it still exceeded the consensus estimate of $2.43 per share. Additionally, CRL raised its guidance for full-year 2024 revenue and non-GAAP EPS, which likely contributed to increased investor confidence.
For the current fiscal year ending in December, analysts predict a 4.5% EPS decline year-over-year to $10.19. Notably, CRL has a consistent history of exceeding Wall Street’s earnings estimates over the last four quarters.
Among the 17 analysts tracking CRL, the consensus rating stands at “Hold,” comprising five “Strong Buy,” ten “Hold,” and two “Strong Sell” recommendations.
This stance is less optimistic than three months ago when seven analysts rated it as a “Strong Buy.”
On November 25, Baird analyst Eric Coldwell reiterated a “Neutral” rating on CRL, adjusting the price target to $197, indicating a slight 1.3% downside potential from current levels. The average price target of $216.40 offers a modest 8.4% upside, while the highest target of $250 suggests a potential increase of 25.2%.
On the date of publication, Neharika Jain did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
