Company Reports

Narrow-moat Charles River Laboratories ended 2023 with revenue of $4.13 billion, representing growth of nearly 4% from the prior year. The company has continued to experience pressure from cautious client spending amid macroeconomic challenges, as cancellations have been elevated compared with historical levels and customers have reprioritized their pipelines. Despite these near-term challenges, we think these macroeconomic issues will improve over our forecast period. We have a positive long-term outlook based on the company’s leading position in the industry and steadily increasing demand for preclinical outsourcing services as drug development continues to become more complex with a greater focus on biologics and cell and gene therapies. We maintain our fair value estimate of $260 per share, and we now view shares as fairly valued as they have moved into 3-star territory.

Charles River Laboratories reported third-quarter results highlighted by revenue of $1.03 billion, a 4% increase from the prior-year period. The company has experienced pressure from cautious client spending patterns. This has created headwinds for the research models and services segment as biopharma customers have reprioritized pipelines and are conserving cash amid macroeconomic challenges.

Charles River Laboratories reported second-quarter results highlighted by revenue of $1.06 billion, representing a 9% increase compared to the prior year period. Charles River is tracking our expectations for the year, and we maintain our fair value estimate of $260 per share. We view the stock as undervalued, currently trading in 4-star territory, about 17% below our fair value estimate. We reaffirm our narrow moat rating, which is based on intangible assets and switching costs associated with its animal research models and its preclinical discovery and safety assessment services.

Charles River Laboratories reported solid first-quarter results highlighted by revenue of $1.03 billion, representing a 12% increase compared with the prior-year period. Charles River’s strong start to the year was due to healthy demand and pricing gains globally. Investors reacted positively to the results and sent the stock up 5%. We maintain our fair value estimate of $260 per share, and we view the stock as undervalued, currently trading in 4-star territory. We reaffirm our narrow moat and stable moat trend ratings, which are based on the company’s strong competitive advantages and expansive offerings of preclinical services.

Animal research models have been the foundation of Charles River's business since 1947, and the company has expanded to provide solutions encompassing research models and related services, drug discovery, preclinical testing, and manufacturing support. It services nearly all top and mid-tier biopharma players.

Charles River reported strong fourth-quarter results highlighted by revenue of $1.1 billion and full-year revenue of nearly $4 billion, representing a 12% increase compared with 2021’s revenue. The company continues to benefit from strong booking demand and a robust backlog. During the earnings call, management announced that it received a subpoena from the U.S. Department of Justice, or DOJ, on Feb. 17 related to an investigation into the Cambodian nonhuman primate, or NHP, supply chain. In mid-November 2022, the DOJ charged two Cambodian officials and six coconspirators with felonies related to an NHP smuggling scheme in which wild-caught macaques were laundered through Cambodian entities for export to the United States and elsewhere and were falsely labeled as captive bred, which violates the Endangered Species Act and the Lacey Act. Charles River Laboratories was not named in the DOJ charges in November, and it was subpoenaed to provide information related to the case.

Charles River reported third-quarter results in line with our expectations. Quarterly revenue reached $989 million, representing 10% growth year over year. The company continues to benefit from strong booking demand and a robust backlog. While foreign exchange headwinds and interest rate increases are continuing to impact the company in the near term, we maintain our positive long-term outlook. The impact of foreign currency translation reduced Charles Rivers’ reported revenue by 4.5%. Excluding the effect of these items, organic revenue growth of 15% was driven by contributions from all three business segments.

Animal research models have been the foundation of Charles River's business since 1947, and the company has expanded to provide solutions encompassing research models and related services, drug discovery, preclinical testing, and manufacturing support. It services nearly all top and mid-tier biopharma players.

Charles River reported second-quarter results (earlier in the month) largely in line with our expectations. Quarterly revenue reached $973 million, representing a 6% year-over-year increase. The company continues to benefit from strong booking demand and a robust backlog. While foreign exchange headwinds and interest rate increases are impacting the company in the near term, we maintain our positive long-term outlook. Our fair value estimate of $260 per share remains unchanged, and we view the stock as undervalued, currently trading in 4-star territory. We maintain our narrow moat and stable trend ratings, which are based on the company’s robust competitive position and expansive offerings of preclinical services.

Charles River reported solid first-quarter results in line with our expectations, and quarterly revenue reached $914 million, representing an increase of nearly 11% year over year. The company continues to benefit from strong booking activity and a robust backlog. We’ve updated our model with the latest results, and we maintain our $260 fair value estimate. Charles River is currently trading in 3-star territory about 7% below our fair value estimate. We maintain our narrow moat and stable trend ratings, which are based on the company’s robust competitive position and expansive offerings of preclinical services.

Charles River reported solid fourth-quarter revenue of $905 million and ended the year with total revenue of $3.5 billion, representing a 21% increase from 2020. We’ve updated our model with the latest results, and we raised our fair value estimate to $260 per share from $244, reflecting stronger than expected revenue growth in the discovery & safety assessment segment combined with the impact of the time value of money. While we believe Charles River is well positioned to post strong sales growth over the next five years with over 11.5% CAGR, the stock’s high valuation seems to expect even stronger potential. Despite our view on valuation, the company’s robust competitive position in the industry continues to support a narrow moat rating.

Animal research models have been the foundation of Charles River's business since 1947, and the company has expanded to provide solutions encompassing research models and related services, drug discovery, preclinical testing, and manufacturing support. It services nearly all top and mid-tier biopharma players.

Charles River reported third-quarter revenue of $896 million, representing an increase of 21% from the prior-year period. GAAP earnings per share of $2.01 was up from $1.72 in the second quarter. We’ve updated our model with the latest results, and we raised our fair value estimate to $244 per share from $225 due to management’s lower-than-expected tax rate for 2021, $115 million in recent divestitures, and the impact of the time value of money. We maintain our narrow moat, which is based on intangible assets and switching costs associated with Charles River’s leading research models and its discovery and safety assessment services.

Animal research models have been the foundation of Charles River's business since 1947, and the company has expanded to provide solutions encompassing research models and related services, drug discovery, preclinical testing, and manufacturing support. It services nearly all top and mid-tier biopharma players.

Charles River reported stronger-than-expected second-quarter revenue of nearly $915 million, representing an increase of 34% from the prior-year period. GAAP net income was $88.4 million for the quarter, an increase of 31% from second-quarter 2020. Due to robust industry demand across Charles River’s segments, management has increased its guidance for 2021. We’ve raised our fair value estimate to $225 per share from $170 due to a stronger outlook for the year thanks to healthy client demand and a more positive impact from the acquisitions of Cognate BioServices and Vigene Biosciences. We maintain our narrow moat rating, which is based on the intangible assets and switching costs associated with Charles River’s leading research models and related services, including discovery and safety assessment.

Animal research models have been the foundation of Charles River's business since 1947, and the company has expanded to provide solutions encompassing research models and related services, drug discovery, preclinical testing, and manufacturing support. It services nearly all top and mid-tier biopharma players.

Charles River announced it will acquire Vigene Biosciences, a gene therapy contract development and manufacturing organization (CDMO) for $292.5 million in cash. The transaction is expected to close in the third quarter of 2021, and the deal includes additional payments of up to $57.5 million contingent on future performance. Management anticipates funding the acquisition through its existing credit facility, which has a borrowing capacity of up to $3 billion.

Charles River reported strong first-quarter revenue of nearly $825 million, an increase of almost 17% year over year. GAAP net income was $61.5 million, an increase of 21% from first-quarter 2020. We’ve increased our fair value estimate to $170 per share from $162 due to a stronger near-term outlook and a more positive impact from the Cognate BioServices acquisition, which closed at the end of March. We maintain our narrow moat rating, which is based on the intangible assets and switching costs associated with Charles River’s leading research models and related services, including discovery and safety assessment.

Animal research models have been the foundation of Charles River's business since 1947, and the company has expanded to provide solutions encompassing research models and related services, drug discovery, preclinical testing, and manufacturing support. It services nearly all top and mid-tier biopharma players.

After taking a fresh look at Charles River Laboratories, we’ve slightly raised our fair value estimate to $162 per share from $161, which is primarily attributed to the time value of money since our last update. We continue to have a positive outlook for 2021 and we anticipate about 13% revenue growth and 16% adjusted EPS growth. Nevertheless, we view shares as very expensive. We’re maintaining our narrow moat and stable moat trend ratings.