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Charles River Laboratories Intl (CRL)
:CRL

Charles River Labs (CRL) AI Stock Analysis

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Charles River Labs

(NYSE:CRL)

Rating:71Outperform
Price Target:
$158.00
▲(4.23%Upside)
Charles River Labs scores well due to positive operational cash flow and strategic board changes, which bolster its future outlook. However, profitability concerns reflected in a negative P/E ratio and recent revenue declines temper the overall score.
Positive Factors
Financial Performance
Charles River Laboratories reported a strong first-quarter performance with better-than-expected results in DSA and RMS.
Market Position
CRL holds an enviable market position as a key preclinical development partner with differentiated scale and product breadth.
Strategic Partnerships
The cooperation agreement with Elliott is likely to enhance core strengths and explore further value creation opportunities.
Negative Factors
Macro Pressure
DSA/RMS are exposed to macro pressure and FDA's animal testing plans.
Operational Challenges
There is some concern about the shift away from animal testing, which could impact certain operations.
Regulatory Challenges
Concerns about funding for A&G could pose a challenge, though they have minimal near-term impact from the phase-out of animal testing.

Charles River Labs (CRL) vs. SPDR S&P 500 ETF (SPY)

Charles River Labs Business Overview & Revenue Model

Company DescriptionCharles River Laboratories International, Inc. (CRL) is a leading global contract research organization (CRO) that provides essential products and services to accelerate research and drug development efforts. The company operates in various sectors, including research models and services, discovery and safety assessment, and manufacturing support. Its core offerings include research models, preclinical and clinical laboratory services, and biologics testing solutions, primarily catering to the pharmaceutical, biotechnology, and academic sectors.
How the Company Makes MoneyCharles River Laboratories generates revenue through a diversified model that includes three primary segments: Research Models and Services (RMS), Discovery and Safety Assessment (DSA), and Manufacturing Support (MS). RMS provides animal models and associated services, which are crucial for biomedical research. DSA offers preclinical and clinical laboratory services that support drug discovery and safety assessments, a critical step in drug development. The MS segment provides testing and manufacturing services for biologics and biosimilars, ensuring compliance with regulatory standards. Significant partnerships with pharmaceutical and biotech companies, as well as academic institutions, bolster their revenue streams by maintaining steady demand for their comprehensive suite of research and testing services.

Charles River Labs Key Performance Indicators (KPIs)

Any
Any
Revenue by Type
Revenue by Type
Chart InsightsCharles River Labs' Service revenue shows a declining trend since 2023, reflecting broader revenue challenges. However, the earnings call highlights an optimistic outlook due to improved DSA performance and strategic investments, which have led to increased financial guidance despite the overall revenue decline. The Product segment remains volatile, but growth in small and midsized biotech revenue suggests resilience in specific areas. Cost-saving measures and strategic investments in NAMs are expected to support future growth, even as the company navigates NIH funding uncertainties and manufacturing challenges.
Data provided by:Main Street Data

Charles River Labs Earnings Call Summary

Earnings Call Date:May 07, 2025
(Q1-2025)
|
% Change Since: 31.35%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Neutral
The earnings call reflected a cautious yet optimistic outlook, with strong cost management and improved DSA performance offsetting revenue declines across segments. While there are concerns about NIH funding and challenges in the Manufacturing segment, the company is optimistic about strategic investments and increased guidance.
Q1-2025 Updates
Positive Updates
Improved DSA Segment Performance
DSA net book-to-bill improved to 1.04x in the first quarter, the first time above 1x in over 2 years, due to improved bookings and a decline in study cancellations.
Strong Cost Savings and Margin Improvement
Operating margin increased by 60 basis points to 19.1% year-over-year, driven by cost savings from restructuring initiatives, contributing to EPS growth of 3.1%.
Increased Financial Guidance
Due to better-than-expected DSA performance, revenue guidance was raised by 100 basis points to a 2.5% to 4.5% decrease organically, and non-GAAP EPS guidance was increased by $0.20 at midpoint.
Growth in Small and Midsized Biotech Revenue
Revenue for small and midsized biotech clients grew for the second consecutive quarter, indicating resilience despite funding challenges.
Successful Strategic Investments
Continued expansion into NAMs with $200 million annual revenue from NAMs-related services, highlighting Charles River's investment in advanced in vitro toxicology, predictive immunotoxicology assays, and organ-on-a-chip platforms.
Negative Updates
Revenue Decline
First quarter revenue was $984.2 million, a 2.7% decrease compared to last year. On an organic basis, revenue declined 1.8%, driven by low single-digit organic decreases in each business segment.
Challenges in Manufacturing Segment
Manufacturing revenue declined by 2.2% on an organic basis, impacted by lower commercial revenue in the CDMO business and a slow start for the Biologics Testing business.
Potential Impact of NIH Funding Cuts
Concerns over proposed NIH budget cuts and potential impact on future funding levels, particularly affecting North American academic and government clients.
Ongoing Pressure in RMS Segment
RMS revenue decreased by 2.5% on an organic basis, driven by the timing of NHP shipments in China and lower revenue for the Cell Solutions business.
Company Guidance
During the Charles River Laboratories First Quarter 2025 Earnings Conference Call, the company provided an updated financial guidance for the year. They raised their 2025 revenue guidance by 100 basis points to a 2.5% to 4.5% organic decrease and increased their non-GAAP earnings per share guidance by $0.20 at the midpoint, setting a new range of $9.30 to $9.80. This adjustment was primarily driven by better-than-expected DSA performance, where the net book-to-bill ratio returned to above 1x for the first time in over two years, indicating improved quarterly bookings. Despite a 2.7% decrease in revenue to $984.2 million for the first quarter, the operating margin improved to 19.1%, up 60 basis points year-over-year, supported by cost-saving initiatives and favorable mix. Additionally, the company generated approximately $112.4 million in free cash flow and repurchased $350 million in shares during the quarter.

Charles River Labs Financial Statement Overview

Summary
Strong operational cash flows and a stable equity base are positives. However, declining revenue and profitability metrics highlight potential operational challenges, with a negative net income impacting ROE.
Income Statement
65
Positive
Charles River Labs has shown a fluctuating revenue growth with a recent decline, indicated by a -2.1% drop in revenue from 2024 to TTM 2025. Gross profit margin remains healthy at 31.8% for TTM 2025, though lower compared to previous years. The net profit margin turned negative to -0.8% in TTM 2025, revealing profitability challenges, exacerbated by declining EBIT and EBITDA margins to 4.8% and 13.6% respectively.
Balance Sheet
70
Positive
The company's debt-to-equity ratio stands at 0.93 for TTM 2025, indicating a moderate level of leverage. The equity ratio is stable at 42.1%, showcasing a good asset base supported by equity. However, the ROE has turned negative due to the net loss, posing concerns about shareholder returns.
Cash Flow
75
Positive
Operating cash flow remains robust at $776 million in TTM 2025, a positive indicator. Free cash flow has increased by 12.3% from the previous year, demonstrating effective cash management. The operating cash flow to net income ratio is high due to a negative net income, suggesting strong operational cash generation despite profitability challenges.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue4.02B4.05B4.13B3.98B3.54B2.92B
Gross Profit1.28B1.33B1.50B1.46B1.33B1.07B
EBITDA546.00M581.14M1.03B1.04B854.29M759.15M
Net Income-31.56M10.30M474.62M486.23M390.98M364.30M
Balance Sheet
Total Assets7.58B7.53B8.20B7.60B7.02B5.49B
Cash, Cash Equivalents and Short-Term Investments229.36M194.61M276.77M233.91M241.21M228.42M
Total Debt2.99B2.72B3.07B3.10B2.92B2.14B
Total Liabilities4.34B4.02B4.54B4.58B4.43B3.35B
Stockholders Equity3.19B3.46B3.60B2.98B2.53B2.11B
Cash Flow
Free Cash Flow563.24M501.61M365.37M294.91M532.03M380.01M
Operating Cash Flow776.39M734.58M683.90M619.64M760.80M546.58M
Investing Cash Flow-204.77M-245.09M-563.15M-607.92M-1.44B-601.54M
Financing Cash Flow-674.60M-550.93M-85.52M-42.40M672.60M47.25M

Charles River Labs Technical Analysis

Technical Analysis Sentiment
Positive
Last Price151.59
Price Trends
50DMA
133.80
Positive
100DMA
145.41
Positive
200DMA
167.70
Negative
Market Momentum
MACD
3.56
Positive
RSI
62.67
Neutral
STOCH
67.22
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CRL, the sentiment is Positive. The current price of 151.59 is above the 20-day moving average (MA) of 145.66, above the 50-day MA of 133.80, and below the 200-day MA of 167.70, indicating a neutral trend. The MACD of 3.56 indicates Positive momentum. The RSI at 62.67 is Neutral, neither overbought nor oversold. The STOCH value of 67.22 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CRL.

Charles River Labs Risk Analysis

Charles River Labs disclosed 37 risk factors in its most recent earnings report. Charles River Labs reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Charles River Labs Peers Comparison

Overall Rating
UnderperformOutperform
Sector (48)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
82
Outperform
$42.66B49.0159.33%5.56%4.66%
DGDGX
79
Outperform
$19.94B22.5813.35%1.79%9.38%6.43%
73
Outperform
$22.42B-18.66%51.50%53.23%
72
Outperform
$10.28B115.092.67%2.78%3.31%-72.63%
CRCRL
71
Outperform
$7.38B449.94-0.92%-2.16%-107.31%
54
Neutral
$14.76B-23.82%-3.47%25.55%
48
Neutral
AU$2.44B3.89-64.25%2.90%35.15%13.63%
* Healthcare Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
CRL
Charles River Labs
151.59
-54.99
-26.62%
IDXX
Idexx Laboratories
527.78
40.58
8.33%
ILMN
Illumina
94.16
-10.22
-9.79%
QGEN
Qiagen
48.04
6.96
16.94%
DGX
Quest Diagnostics
177.06
42.90
31.98%
NTRA
Natera
168.17
59.88
55.30%

Charles River Labs Corporate Events

Executive/Board ChangesShareholder Meetings
Charles River Labs Extends CEO’s Term Amid Shareholder Meeting
Neutral
May 23, 2025

On May 20, 2025, Charles River Laboratories extended the employment term of its CEO, James C. Foster, by an additional year, maintaining existing terms. During the same day, the company held its Annual Meeting of Shareholders, electing seven directors, appointing four new board members, and approving executive compensation and auditor appointments, while rejecting a proposal from PETA regarding non-human primate reports.

The most recent analyst rating on (CRL) stock is a Hold with a $235.00 price target. To see the full list of analyst forecasts on Charles River Labs stock, see the CRL Stock Forecast page.

Executive/Board ChangesBusiness Operations and Strategy
Charles River Labs Appoints New Directors After Agreement
Positive
May 7, 2025

On May 6, 2025, Charles River Laboratories entered a Cooperation Agreement with Elliott Investment Management, leading to the appointment of four new directors to its Board following the 2025 Annual Meeting. This strategic move includes a comprehensive review of the company’s business to enhance long-term shareholder value, with Elliott’s involvement signifying confidence in Charles River’s potential. The changes aim to optimize operations and drive efficiencies, with the new directors bringing significant industry expertise and fresh perspectives.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jun 05, 2025