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Valued at a market cap of $9.2 billion, Charles River Laboratories International, Inc. (CRL) provides drug discovery, non-clinical development, and safety testing services. The Wilmington, Massachusetts-based company partners with pharmaceutical, biotechnology, government, and academic institutions to help accelerate research and drug development. It is expected to announce its fiscal Q3 earnings for 2025 before the market opens on Wednesday, Nov. 5. Before this event, analysts expect this healthcare company to report a profit of $2.32 per share, down 10.4% from $2.59 per share in the year-ago quarter. The company has a promising trajectory of consistently beating Wall Street’s bottom-line estimates in each of the last four quarters. Its earnings of $3.12 per share in the previous quarter topped the consensus estimates by a notable margin of 24.8%. For fiscal 2025, analysts expect CRL to report a profit of $10.17 per share, down 1.5% from $10.32 per share in fiscal 2024. Nonetheless, its EPS is expected to rebound and grow by 5.3% year-over-year to $10.71 in fiscal 2026. CRL has gained marginally over the past 52 weeks, lagging behind the S&P 500 Index's ($SPX) 14.5% uptick over the same time frame. However, it has outpaced the Health Care Select Sector SPDR Fund’s (XLV) 3.4% drop over the same time period. On Aug. 6, shares of CRL plunged 10.3% after its Q2 earnings release, despite posting better-than-expected performance. Both its revenue of $1 billion and adjusted EPS of $3.12 handily topped the consensus estimates. Moreover, compared to the year-ago quarter, its top line increased marginally, while its bottom line grew 11.4% supported by improved operating margins across all three business segments. However, this modest revenue growth was largely driven by favourable foreign currency movements, and organic revenue actually declined, primarily due to weakness in the Discovery and Safety Assessment (DSA) segment. This slowdown in core business performance likely sparked investor concerns, leading to the stock’s sharp decline. Nonetheless, on the back of its upbeat Q2 results and expectations of a gradual recovery in the DSA segment, CRL raised its fiscal 2025 guidance, now projecting adjusted EPS in the range of $9.90 to $10.30, and revenue to decline modestly by 0.5% to 2.5%. Wall Street analysts are moderately optimistic about CRL’s stock, with an overall "Moderate Buy" rating. Among 16 analysts covering the stock, eight recommend "Strong Buy," and eight suggest "Hold.” The mean price target for CRL is $187.15, indicating a marginal potential upside from the current levels.
