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Wilmington, Massachusetts-based Charles River Laboratories International, Inc. (CRL) is a full-service, early-stage contract research organization that provides drug discovery, non-clinical development, and safety testing services. Valued at a market cap of $10.2 billion, the company offers essential products and services to help pharmaceutical and biotechnology companies, government agencies, and leading academic institutions globally accelerate their research and drug development efforts.
Shares of this diagnostics and research company have significantly underperformed the broader market over the past 52 weeks. CRL has gained 2.5% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 31.8%. Moreover, on a YTD basis, the stock is down 15.6%, compared to SPX’s 25.8% gains.
Zooming in further, CRL’s underperformance becomes more evident when compared to the Health Care Select Sector SPDR Fund’s (XLV) 12.8% gain over the past 52 weeks and nearly 7.8% return on a YTD basis.
On Nov. 6, shares of CRL soared 13.5% after its better-than-expected Q3 earnings release. The company reported revenues of $1.01 billion, which declined 1.6% from a year ago but surpassed the Wall Street estimates of $977.2 million. Its adjusted EPS also declined 4.8% year-over-year to $ 2.59 but still managed to exceed the consensus estimate of $2.43 per share. CRL slightly raised its full-year 2024 revenue and non-GAAP earnings per share guidance, which might have further enhanced investor confidence.
For the current fiscal year, ending in December, analysts expect CRL’s EPS to decline 4.5% year over year to $10.19. 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 five “Strong Buy,” 10 “Hold,” and two “Strong Sell” ratings.
The configuration is less bullish than three months ago, with seven analysts suggesting a “Strong Buy.”
On Nov. 25, Baird analyst Eric Coldwell maintained a “Neutral” rating on CRL and lowered its price target to $197, which indicates a slight 1.3% downside potential from the current levels.
The mean price target of $216.40 represents a modest 8.4% upside from CRL’s current price levels, while the Street-high price target of $250 suggests an upside potential of 25.2%.
