Charles Rhyee, an analyst from TD Cowen, maintained the Hold rating on Charles River Labs (CRL – Research Report). The associated price target was lowered to $228.00.
Charles Rhyee has given his Hold rating due to a combination of factors surrounding Charles River Labs’ current financial outlook and market conditions. The rating reflects concerns about the company’s ability to achieve the revenue ramp-up in the second half of the year as implied by its earnings guidance. While there is optimism due to strong initial-quarter biotech funding, Rhyee remains cautious, noting that achieving the lower end of the revenue growth guidance would require the company’s Safety Assessment (SA) business to operate near full capacity in the final quarters of the year. This is deemed uncertain, especially with the observed high rate of backlog cancellations in the first quarter.
Additionally, Rhyee anticipates a weaker second-quarter performance in the Research Models and Services (RMS) segment, following an unusually strong first-quarter result buoyed by the timing of non-human primate (NHP) shipments. The expected decline is attributed to the finite supply of NHPs and the extended time needed to replenish this stock, which includes longer gestation periods. Despite these concerns, there is an expectation of continued strength in the Manufacturing Support (MFR) segment, as management has raised its revenue guidance and observes signs of manufacturing destocking nearing its end, alongside increased client activity and new projects in the Contract Development and Manufacturing Organization (CDMO) business.
Rhyee covers the Healthcare sector, focusing on stocks such as Teladoc, Charles River Labs, and CVS Health. According to TipRanks, Rhyee has an average return of 3.4% and a 48.24% success rate on recommended stocks.
In another report released on May 9, Jefferies also assigned a Hold rating to the stock with a $226.00 price target.
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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.
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