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Charles River (CRL) Gains From Global Demand Amid FX Woes
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Charles River (CRL - Free Report) has been benefiting from strong organic revenue growth and robust demand from biotech as well as pharmaceutical clients. Yet, foreign exchange woes mar growth. The stock carries a Zacks Rank #3 (Hold).
Charles River’s Research Models and Services (RMS) segment continues to benefit from broad-based growth in all geographic regions for small research models. Further, the company is showing strong growth within the end-sourcing solutions business led by the Charles River Accelerator and Development Labs (CRADL) initiative. Global biopharmaceutical companies, small and midsized biotechs, and academic and government accounts significantly contributed to the growth rate.
At the beginning of 2023, the company witnessed a dull performance in China. However, in the just-reported second quarter of 2023, the timing of large model shipments within China benefited the growth rate, outperforming Charles River’s full-year RMS outlook of high single-digit organic growth.
Charles River Laboratories International, Inc. Price
Within Discovery and Safety Assessment (DSA), the company is gaining from its expertise in the discovery of preclinical candidates and the design, execution and reporting of safety assessment studies for numerous types of compounds, including cell and gene therapies and small and large molecule pharmaceuticals. The demand for these services is driven by the needs of large global pharmaceutical companies that continue to transition to an outsourced drug development model, in addition to mid-size and emerging biotechnology companies, industrial and agrochemical companies and non-governmental organizations that rely on outsourcing.
Charles River broadens the scope of the products and services across the drug discovery and early-stage development continuum through focused acquisitions. Within RMS, the company acquired Explora Biolabs in April 2022. San Diego-based Explora has a similar focus like Charles River’s CRADL, currently operating more than 15 preclinical vivarium facilities with a greater presence on the West Coast.
Over the past year, shares of Charles River have lost 6.3% compared with the industry’s 9.4% decline.
On the flip side, since the beginning of 2023, although revenues for Discovery Services have been growing, the rate of growth has moderated. This is reflective of the current market environment, coupled with the shorter-term nature of both discovery projects and businesses backlog.
The DSA backlog declined on a sequential basis through the first half of 2023. This trend is reflective of the normalization of booking and proposal activity compared to 2022. Clients are not booking work as much as they did over the past few years, and this is the result of their evaluation of pipeline priorities and scheduling with a nearer-term focus.
Further, foreign exchange is a major headwind for Charles River due to a considerable percentage of its revenues coming from outside the United States. The strengthening of the euro and some other developed market currencies has been constantly hampering the company’s performance in the international markets. Going by our model, the impact of foreign currency translation is projected to reduce reported revenue growth by 0.4% in 2023.
Haemonetics’ stock has risen 19.9% in the past year. Earnings estimates for Haemonetics have increased from $3.56 to $3.74 in 2023 and $3.96 to $4.07 in 2024 in the past 30 days. It currently carries Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
HAE’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 19.39%. In the last reported quarter, it delivered an earnings surprise of 38.16%.
Estimates for Quanterix’s 2023 loss per share have narrowed from $1.19 to 97 cents in the past 30 days. Shares of the company have increased 167.5% in the past year against the industry’s decline of 1.7%. It currently carries Zacks Rank #2 (Buy).
QTRX’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 30.39%. In the last reported quarter, it posted an earnings surprise of 55.56%.
Estimates for SiBone’s2023 loss have narrowed from $1.42 to $1.27 per share in the past 30 days. Shares of the company have increased 31% in the past year compared with the industry’s rise of 1.9%. It currently carries Zacks Rank #2.
SIBN’s earnings beat estimates in all the trailing four quarters, the average surprise being 20.37%. In the last reported quarter, SiBone delivered an earnings surprise of 26.83%.
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Charles River (CRL) Gains From Global Demand Amid FX Woes
Charles River (CRL - Free Report) has been benefiting from strong organic revenue growth and robust demand from biotech as well as pharmaceutical clients. Yet, foreign exchange woes mar growth. The stock carries a Zacks Rank #3 (Hold).
Charles River’s Research Models and Services (RMS) segment continues to benefit from broad-based growth in all geographic regions for small research models. Further, the company is showing strong growth within the end-sourcing solutions business led by the Charles River Accelerator and Development Labs (CRADL) initiative. Global biopharmaceutical companies, small and midsized biotechs, and academic and government accounts significantly contributed to the growth rate.
At the beginning of 2023, the company witnessed a dull performance in China. However, in the just-reported second quarter of 2023, the timing of large model shipments within China benefited the growth rate, outperforming Charles River’s full-year RMS outlook of high single-digit organic growth.
Charles River Laboratories International, Inc. Price
Charles River Laboratories International, Inc. price | Charles River Laboratories International, Inc. Quote
Within Discovery and Safety Assessment (DSA), the company is gaining from its expertise in the discovery of preclinical candidates and the design, execution and reporting of safety assessment studies for numerous types of compounds, including cell and gene therapies and small and large molecule pharmaceuticals. The demand for these services is driven by the needs of large global pharmaceutical companies that continue to transition to an outsourced drug development model, in addition to mid-size and emerging biotechnology companies, industrial and agrochemical companies and non-governmental organizations that rely on outsourcing.
Charles River broadens the scope of the products and services across the drug discovery and early-stage development continuum through focused acquisitions. Within RMS, the company acquired Explora Biolabs in April 2022. San Diego-based Explora has a similar focus like Charles River’s CRADL, currently operating more than 15 preclinical vivarium facilities with a greater presence on the West Coast.
Over the past year, shares of Charles River have lost 6.3% compared with the industry’s 9.4% decline.
On the flip side, since the beginning of 2023, although revenues for Discovery Services have been growing, the rate of growth has moderated. This is reflective of the current market environment, coupled with the shorter-term nature of both discovery projects and businesses backlog.
The DSA backlog declined on a sequential basis through the first half of 2023. This trend is reflective of the normalization of booking and proposal activity compared to 2022. Clients are not booking work as much as they did over the past few years, and this is the result of their evaluation of pipeline priorities and scheduling with a nearer-term focus.
Further, foreign exchange is a major headwind for Charles River due to a considerable percentage of its revenues coming from outside the United States. The strengthening of the euro and some other developed market currencies has been constantly hampering the company’s performance in the international markets. Going by our model, the impact of foreign currency translation is projected to reduce reported revenue growth by 0.4% in 2023.
Key Picks
Some better-ranked stocks in the broader medical space are Haemonetics (HAE - Free Report) , Quanterix (QTRX - Free Report) and SiBone (SIBN - Free Report) .
Haemonetics’ stock has risen 19.9% in the past year. Earnings estimates for Haemonetics have increased from $3.56 to $3.74 in 2023 and $3.96 to $4.07 in 2024 in the past 30 days. It currently carries Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
HAE’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 19.39%. In the last reported quarter, it delivered an earnings surprise of 38.16%.
Estimates for Quanterix’s 2023 loss per share have narrowed from $1.19 to 97 cents in the past 30 days. Shares of the company have increased 167.5% in the past year against the industry’s decline of 1.7%. It currently carries Zacks Rank #2 (Buy).
QTRX’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 30.39%. In the last reported quarter, it posted an earnings surprise of 55.56%.
Estimates for SiBone’s2023 loss have narrowed from $1.42 to $1.27 per share in the past 30 days. Shares of the company have increased 31% in the past year compared with the industry’s rise of 1.9%. It currently carries Zacks Rank #2.
SIBN’s earnings beat estimates in all the trailing four quarters, the average surprise being 20.37%. In the last reported quarter, SiBone delivered an earnings surprise of 26.83%.