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Charles River (CRL) to Report Q4 Earnings: What's in Store?

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Charles River Laboratories International, Inc. (CRL - Free Report) is expected to report fourth-quarter and full-year 2021 results on Feb 16, before market open.

In the last reported quarter, the company’s adjusted earnings per share of $2.70 surpassed the Zacks Consensus Estimate by 5.06%. The company’s earnings surpassed estimates in the trailing four quarters, the average beat being 10.64%.

Let’s take a look at how things have shaped up prior to this announcement.

Factors at Play

Within the Research Models and Services (RMS) segment, in recent months, the company has been registering robust demand for research models, particularly in China, broad-based growth across Research Model Services, partially offset by continued headwinds for the cell supply business. With the continued non-clinical research activity that is being conducted by biopharmaceutical and academic clients, the company is expected to have registered similar trends in Q4 as well. The divestment of RMS operations in Japan and Charles River’s CDMO site in Sweden that took place in August 2021 is expected to have a decremental impact of the company’s RMS revenues for Q4 compared with the year-ago quarter.

Within the Discovery and Safety Assessment (DSA) arm, the Safety Assessment business is likely to have gained from robust demand from both biotech and global biopharma clients coupled with price increases, as it did in the previous quarter. The company earlier noted that it is well-positioned to meet this robust demand as it continues to expand its scale, science and innovative technologies through a combination of internal investment, M&A and strategic partnership strategy. The Discovery business is likely to have gained from the comprehensive portfolio of oncology, CNS, early discovery and antibody discovery capabilities in the fourth quarter.

The Manufacturing Support, similar to the third quarter, is expected to have gained from revenue growth in the Biologics Testing Solutions and Microbial Solutions businesses in the fourth quarter. In the third quarter, strong demand for cell and gene therapy testing services as well as COVID-19 vaccination work drove the Biologics Testing business. Notably, Charles River expects cell and gene therapies to be long-term growth drivers. The company had earlier stated that the commercial production of COVID vaccines is likely to continue for many years to come, which will support the demand for manufacturing services. This should get reflected in the company’s fourth-quarter results.

The acquisitions of Vigene Biosciences and Cognate are likely to have a full-quarter favorable impact on the company’s Q4 Manufacturing Support revenues. Per the company’s last update, in terms of Cognate, it is actively adding new COVID-19 related projects.The Vigene Biosciences buyout, with its viral vector-based gene delivery systems, enables the firm to achieve its goal of building a comprehensive cell and gene therapy portfolio that covers all the key CDMO platforms.

Q4 Estimates

The Zacks Consensus Estimate for fourth-quarter 2021 revenues is pegged at $891.5 million, suggesting a 12.7% increase over the year-ago reported figure.

The Zacks Consensus Estimate for the company’s fourth-quarter 2021 earnings per share of $2.42 indicates a 1.3% uptick from the year-ago reported figure.

What Our Model Suggests

Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has higher chances of beating estimates. However, this is not the case here as you can see:

Earnings ESP: The company has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #2.

Stocks Worth a Look

Here are a few stocks worth considering, as these have the right combination of elements to beat on earnings this reporting cycle.

Cara Therapeutics (CARA - Free Report) has an Earnings ESP of +5.24% and a Zacks Rank of 1. Cara Therapeutics is slated to release fourth-quarter 2021 results on Feb 24.  

CARA’s earnings yield of 4.2% compares favorably with the industry’s 1.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Henry Schein, Inc. (HSIC - Free Report) has an Earnings ESP of +1.94% and a Zacks Rank of 2. Henry Schein is slated to release fourth-quarter 2021 results on Feb 15. 

Henry Schein’s long-term earnings growth rate is estimated at 11.8%. HSIC’s earnings yield of 5.9% compares favorably with the industry’s 4.1%.

Guardant Health (GH - Free Report) has an Earnings ESP of +9.45% and is a Zacks #2 Ranked stock.

Guardant Healthis slated to release fourth-quarter 2021 results on Feb 23. Guardant Health’s long-term earnings growth rate is estimated at 9.45%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.