Buy Rating on Charles River Labs Amidst Solid Q1 Performance and Positive Market Outlook

Analyst Michael Ryskin of Bank of America Securities reiterated a Buy rating on Charles River Labs (CRL – Research Report), with a price target of $270.00.

Michael Ryskin has given his Buy rating due to a combination of factors including Charles River Labs’ solid first-quarter performance and the maintenance of their full-year non-GAAP guidance. Despite a modest year-over-year decline in sales, the company’s adjusted operating margin and earnings per share outperformed expectations. Management’s confidence in maintaining guidance while navigating through non-operational items suggests a stable financial outlook going forward.

Additionally, Ryskin’s outlook is buoyed by signs of market recovery and management’s expectation of growth in the second half of the year, as evidenced by improving biotech funding and proposal volumes in the Discovery and Safety Assessment (DSA) business. The Research Models and Services (RMS) and Manufacturing (Mfg) segments also present healthy prospects, with expected sales growth, margin expansion, and positive manufacturing trends. Ryskin’s unchanged price objective of $270 reflects confidence in the company’s valuation and the improving market conditions that Charles River Labs is poised to capitalize on.

Based on the recent corporate insider activity of 71 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of CRL in relation to earlier this year.

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Charles River Labs (CRL) Company Description:

Charles River Laboratories International, Inc. is an early-stage contract research company, which provides essential products and services to help pharmaceutical and biotechnology companies, government agencies and academic institutions. It operates through the following segments: Research Models & Services, Discovery & Safety Assessment and Manufacturing Support. The Research Models & Services segment comprises of the production and sale of research models, and also offers services designed to support its client’s use of research models in screening non-clinical drug candidates. The Discovery & Safety Assessment segment offers discovery and safety assessment services, both regulated and non-regulated, in which it include both in vivo and in vitro studies, supporting laboratory services, and strategic preclinical consulting and program management to support product development. The Manufacturing Support segment provides endotoxin and microbial detection, avian vaccine and biologics testing solutions. The company was founded by Henry L. Foster in 1947 and is headquartered in Wilmington, MA.