Back to top

Analyst Blog

Charles River Laboratories International Inc. (CRL - Snapshot Report) recently reaffirmed its guidance for 2012 and provided its outlook for 2013.

Although Charles River maintained its 2012 adjusted earnings guidance ($2.68–$2.73 per share), the company noted that it expects earnings to come between the low and the mid-point of the projected range. The Zacks Consensus Estimate of $2.73 per share is at the high end of the company’s guidance range.

Charles River also maintained its 2012 net sales guidance. The company continues to expect foreign exchange translations to negatively impact sales by 2%. Sales for the year are expected to decline 1% year over year. Charles River’s 2012 sales growth guidance is above the Zacks Consensus Estimate of $1.13 billion, which represents a decline of 0.8% from the year ago period.

In Line 2013 Revenue Guidance

Although Charles River maintained its 2012 adjusted earnings guidance ($2.68–$2.73 per share), the company noted that it expects earnings to come between the low and the mid-point of the projected range. The Zacks Consensus Estimate of $2.73 per share is at the high end of the company’s guidance range.

Charles River also maintained its 2012 net sales guidance. The company continues to expect foreign exchange translations to negatively impact sales by 2%. Sales for the year are expected to decline 1% year over year. Charles River’s 2012 sales growth guidance is above the Zacks Consensus Estimate of $1.13 billion, which represents a decline of 0.8% from the year ago period.

Meanwhile, Charles River’s 2013 adjusted earnings guidance of $2.80–$2.90 per share was below the current Zacks Consensus Estimate of $3.01 per share. The company mentioned that its 2013 guidance does not include the impact of the Vital River acquisition, which is scheduled to close in the first quarter of 2013.

Charles Riveris expecting a slower start to 2013 as far as earnings per share are concerned, due to restricted spending by clients. The company expects its first quarter 2013 earnings to be at par with the year-ago number.

The company is currently running a Profit Improvement Program, under which it will restrict its capital expenditure to around $50 million per year. Charles River expects to save over $25 million in 2012 and another $20 million in 2013.

The company signed several acquisition and partnership agreements in the last few years, including a partnership deal with AstraZeneca plc (AZN - Analyst Report) in October this year. Charles River is currently in talks with several large biopharma companies and expects to convert a few of these discussions into deals next year. These deals will support growth in 2013.

The company expects to buy back 1–1.5 million shares in 2013. The company had around 73.5 million outstanding shares under its current stock repurchase authorization at the end of the third quarter of 2013.

Our Take

Charles River’s earnings guidance for 2013 was well below expectations even though revenue guidance was in-line with expectations. Operating margin is expected to remain at the same level as in 2012. Shares were down more than 9% following the release of 2013 outlook. With the company guiding below expectations, we expect downward revisions in estimates in the next few days.

We currently have a Neutral recommendation on Charles River. The stock carries a Zacks #3 Rank, which translates into a short-term Hold rating.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%