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1. Company Snapshot

1.a. Company Description

Charles River Laboratories International, Inc., a non-clinical contract research organization, provides drug discovery, non-clinical development, and safety testing services in the United States, Europe, Canada, the Asia Pacific, and internationally.It operates through three segments: Research Models and Services (RMS), Discovery and Safety Assessment (DSA), and Manufacturing Solutions (Manufacturing).The RMS segment produces and sells rodent research model strains and purpose-bred rats and mice for use by researchers.


This segment also provides a range of services to assist its clients in supporting the use of research models in research and screening non-clinical drug candidates, including research models, genetically engineered models and services, insourcing solutions, and research animal diagnostic services.The DSA segment offers early and in vivo discovery services for the identification and validation of novel targets, chemical compounds, and antibodies through delivery of non-clinical drug and therapeutic candidates ready for safety assessment; and safety assessment services, such as toxicology, pathology, safety pharmacology, bioanalysis, drug metabolism, and pharmacokinetics services.The Manufacturing segment provides in vitro methods for conventional and rapid quality control testing of sterile and non-sterile pharmaceuticals and consumer products.


This segment also offers specialized testing of biologics that are outsourced by pharmaceutical and biotechnology companies; and avian vaccine services that provide specific-pathogen-free (SPF) fertile chicken eggs, SPF chickens, and diagnostic products used to manufacture vaccines.The company also provides contract vivarium operation services to biopharmaceutical clients.Charles River Laboratories International, Inc.


was founded in 1947 and is headquartered in Wilmington, Massachusetts.

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1.b. Last Insights on CRL

Charles River Laboratories International, Inc.'s recent performance was driven by strong demand in its Research Models and Services (RMS) segment, strategic partnerships, and solid finances. The company's Q3 earnings beat expectations, with quarterly earnings of $2.43 per share. Additionally, JPMorgan Chase upgraded its price target on the stock from $165.00 to $190.00, citing a neutral rating. Institutional investors, including Federated Hermes Inc. and Edgestream Partners L.P., have also shown confidence in the stock, increasing their stakes by 55,929.3% and purchasing a new $1.80 million stake, respectively.

1.c. Company Highlights

2. Charles River Laboratories' Q4 2025 Earnings: A Deeper Dive into the Numbers

Charles River Laboratories reported revenue of $994.2 million in Q4 2025, a 2.6% decline on an organic basis from the previous year, with revenue declines in all three business segments. For the full year, the company reported revenue of $4.02 billion with an organic revenue decrease of 1.6% driven primarily by lower revenue in the DSA and Manufacturing segment. The company's EPS came out at -$5.62, significantly lower than the estimated $2.33. The DSA operating margin was 20.1% in the fourth quarter, a 460 basis point decrease from 2024.

Publication Date: Feb -20

📋 Highlights
  • Revenue Decline:: Q4 revenue fell to $994.2M (-2.6% organic YoY), with full-year revenue at $4.02B (-1.6% organic YoY), driven by declines in all three segments.
  • DSA Margin Pressure:: DSA operating margin dropped 460 bps to 20.1% in Q4 2025 due to lower study volume and higher NHP sourcing costs.
  • 2026 Guidance:: Anticipates 2-4% revenue growth and non-GAAP EPS of $11.25–$11.75, with $0.30 EPS accretion from divestitures and a 20–50 bps margin improvement.
  • Cost Efficiency:: Plans $100M+ incremental cost savings by 2026 via process improvements, procurement, and global business services, targeting 5.5% unallocated corporate costs.
  • Strategic Moves:: KF Cambodia acquisition to enhance NHP sourcing and reduce costs, while divesting non-core assets for $0.60 EPS accretion by 2027 and focusing on biologics, AI, and bioanalysis M&A.

Segment Performance

The DSA segment revenue was $591.6 million, a decrease of 3.3% on an organic basis, driven by lower study volume, particularly for discovery services. RMS revenue in the fourth quarter was $206.3 million, a decrease of 0.9% on an organic basis. Manufacturing Solutions revenue was $196.4 million for the fourth quarter, a decrease of 2.1% on an organic basis. As James C. Foster mentioned, "DSA bookings were starting to ramp up, and we were not optimally using our facilities."

Guidance and Outlook

The company is cautiously optimistic that the favorable DSA demand trends will continue in 2026, resulting in a return to organic revenue growth in the second half of the year for both the DSA segment and the overall company. The guidance includes revenue growth of 2-4% and non-GAAP earnings per share of $11.25-$11.75. Analysts estimate next year's revenue growth at 4.7%, indicating a potential upside.

Valuation Metrics

With a P/E Ratio of -56.0, P/B Ratio of 2.55, and EV/EBITDA of 11.46, the market seems to be pricing in a significant recovery in the company's earnings. The Free Cash Flow Yield is at 6.41%, indicating a relatively attractive valuation. However, the ROE is -4.4%, and the Net Debt / EBITDA is 2.59, which may raise concerns about the company's debt levels.

Strategic Initiatives

The company has made substantial progress on the strategic actions outlined in November to unlock long-term shareholder value, including strengthening and refining its portfolio, driving greater efficiency, and maintaining a balanced yet disciplined approach to capital deployment. The planned divestitures are expected to result in $0.30 non-GAAP earnings per share accretion on an annualized basis.

3. NewsRoom

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Charles River Laboratories International Inc (CRL) Q4 2025 Earnings Call Highlights: Navigating Revenue Declines and Strategic Acquisitions

Feb -18

Source: gurufocus.com

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Charles River Laboratories International, Inc. (CRL) Q4 2025 Earnings Call Transcript

Feb -18

Source: seekingalpha.com

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Charles River Laboratories Q4 Review: Approaching A Bottom

Feb -18

Source: seekingalpha.com

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Here's What Key Metrics Tell Us About Charles River (CRL) Q4 Earnings

Feb -18

Source: zacks.com

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CRL Stock Down Despite Q4 Earnings & Revenue Beat, Margins Rise

Feb -18

Source: zacks.com

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Charles River Laboratories (CRL) Q4 Earnings and Revenues Surpass Estimates

Feb -18

Source: zacks.com

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Charles River forecasts upbeat 2026 profit on improved demand for drug development services

Feb -18

Source: reuters.com

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Charles River Laboratories Announces Executive Appointments

Feb -18

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.68%)

6. Segments

Discovery and Safety Assessment

Expected Growth: 4.5%

Discovery and Safety Assessment growth driven by increasing demand for outsourced R&D services, rising adoption of novel therapeutic modalities, and growing need for regulatory compliance. Additionally, Charles River's strategic acquisitions and investments in emerging technologies, such as gene editing and gene therapy, contribute to its 4.5% growth.

Research Models and Services

Expected Growth: 4.8%

Charles River Laboratories' Research Models and Services segment growth is driven by increasing demand for outsourced research, advancements in gene editing and gene therapy, and rising adoption of humanized models. Additionally, the company's strategic acquisitions, expansion into emerging markets, and investments in digitalization and automation are contributing to its 4.8% growth.

Manufacturing Solutions

Expected Growth: 5.2%

The 5.2% growth in Manufacturing Solutions from Charles River Laboratories International, Inc. is driven by increasing demand for outsourced pharmaceutical manufacturing, growing adoption of biologics and cell therapies, and expansion into emerging markets. Additionally, the company's investments in capacity expansion, technology advancements, and strategic acquisitions are contributing to its growth momentum.

7. Detailed Products

Research Models and Services

Provides a wide range of research models, including genetically engineered models, and services such as model creation, breeding, and quarantine services

Discovery and Safety Assessment

Offers a range of services, including in vitro and in vivo testing, bioanalysis, and pharmacokinetic analysis

Regulatory Testing and Compliance

Provides testing and compliance services, including GLP-compliant studies, to support regulatory submissions

Manufacturing Support

Offers services, including analytical testing, method development, and validation, to support the manufacturing of pharmaceuticals and biologics

Consulting and Outsourcing

Provides strategic consulting and outsourcing services, including program management, project management, and functional outsourcing

8. Charles River Laboratories International, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Charles River Laboratories International, Inc. is medium due to the presence of alternative contract research organizations and in-house research capabilities of pharmaceutical companies.

Bargaining Power Of Customers

The bargaining power of customers is low due to the specialized nature of Charles River's services and the lack of alternative providers.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium due to the presence of multiple suppliers of research models and services, but the company's dependence on a few key suppliers.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry, including the need for specialized facilities, equipment, and expertise.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of several established players in the contract research organization industry, leading to intense competition for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 49.37%
Debt Cost 5.39%
Equity Weight 50.63%
Equity Cost 11.15%
WACC 8.31%
Leverage 97.51%

11. Quality Control: Charles River Laboratories International, Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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LabCorp

A-Score: 5.4/10

Value: 4.6

Growth: 4.3

Quality: 5.4

Yield: 2.0

Momentum: 7.0

Volatility: 9.3

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Medpace

A-Score: 5.0/10

Value: 1.3

Growth: 9.3

Quality: 7.9

Yield: 0.0

Momentum: 9.5

Volatility: 2.0

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Natera

A-Score: 4.7/10

Value: 4.0

Growth: 7.0

Quality: 3.6

Yield: 0.0

Momentum: 8.5

Volatility: 5.0

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Waters

A-Score: 4.4/10

Value: 1.0

Growth: 5.2

Quality: 7.7

Yield: 0.0

Momentum: 6.0

Volatility: 6.3

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Twist Bioscience

A-Score: 3.8/10

Value: 6.8

Growth: 7.1

Quality: 4.6

Yield: 0.0

Momentum: 2.0

Volatility: 2.0

1-Year Total Return ->

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Charles River Laboratories

A-Score: 3.3/10

Value: 4.6

Growth: 4.1

Quality: 3.1

Yield: 0.0

Momentum: 3.5

Volatility: 4.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

160.71$

Current Price

160.72$

Potential

-0.00%

Expected Cash-Flows