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Wilmington, Massachusetts-based Charles River Laboratories International, Inc. (CRL) is a leading provider of preclinical and clinical laboratory services for the pharmaceutical, biotechnology, and medical device industries. The company, with a market cap of $8.7 billion, operates globally, offering services such as animal models for research, toxicology studies, microbial testing, and biologics manufacturing support.
CRL shares have significantly underperformed the broader market over the past year. CRL has dropped 32.5% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 17%. Moreover, on a YTD basis, the stock is down 9.5%, compared to SPX’s 1.3% gains.
Zooming in further, CRL has also trailed the Health Care Select Sector SPDR Fund’s (XLV) marginal gain over the past 52 weeks and 8.2% return on a YTD basis.
On Feb. 19, Charles River Laboratories reported its fourth-quarter earnings with a net loss of $214.5 million ($4.22 per share) due to non-recurring costs, but adjusted earnings of $2.66 per share exceeded expectations of $2.50. Revenue reached $1 billion, slightly down from the prior year but above forecasts. For 2024, the company posted a non-GAAP net income of $532.9 million or 10.32 cents per share.
Looking ahead, CRL projects 2025 adjusted earnings between $9.10 and $9.60 per share. Despite the reported loss, the company’s strong adjusted earnings and revenue performance underscored its resilience, driving the stock up 6.9%.
For the current fiscal year, ending in December, analysts expect CRL’s EPS to decline 9.4% year over year to $9.35. The company has a solid track record of consistently beating Wall Street's bottom-line estimates in each of the last four quarters.
Among the 17 analysts covering the stock, the consensus rating is a “Hold,” which is based on three “Strong Buy,” 12 “Hold,” and two “Strong Sell” ratings.
The configuration is less bullish than two months ago, with five analysts suggesting a “Strong Buy” for the stock.
On Feb. 19, JPMorgan Chase & Co. (JPM) analyst Casey Woodring reaffirmed a “Hold” rating on Charles River and set a price target of $165.
The mean price target of $179.27 represents a modest 7.3% upside from CRL’s current price levels, and the Street-high price target of $210 suggests an upside potential of 25.7%.
