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Charles River (CRL) to Report Q1 Earnings: What's in Store?

Charles River Laboratories International, Inc. CRL is expected to report first-quarter 2023 results on May 11.

In the last reported quarter, the company’s adjusted earnings per share of $2.98 surpassed the Zacks Consensus Estimate by 8.4%. Earnings surpassed estimates in each of the trailing four quarters, the average beat being 3.93%.

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

Factors at Play

The Research Models and Services (RMS) segment is likely to have gained from the continued global demand for research models and associated services. Similar to the last reported quarter, the ongoing broad-based demand and meaningful price increases in the Research Model business — particularly in North America — and Global Research Models Services — particularly In sourcing Solutions and GEMS — driven by increased research activities in this geography are expected to have contributed to the top line.

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The company’s CRADLE or Charles River Accelerator and Development Labs initiative and research models in North America and China, including last year’s Explora acquisition are anticipated to have maintained its growth momentum in Q1, benefiting the in-sourcing solutions business within the RMS arm. Charles River is also expected to have benefited in the first quarter from price increases, which partially offset inflationary cost pressure.

The Discovery and Safety Assessment (DSA) arm is likely to have benefited from growth in the Safety Assessment business on meaningful price increases and higher study volume. The broad-based and sustained client demand across its Safety Assessment business is expected to have benefited the company’s performance in the to-be-reported quarter. In January 2023, Charles River acquired SAMDI Tech that provides former’s clients with seamless access to the premier, label-free HTS MS platform and create a comprehensive, industry-leading library of drug discovery solutions. This acquisition is expected to have contributed significantly to the company’s performance in Q1.

Of late, Charles River has been witnessing growing client interest in integrated drug discovery programs. To meet the robust client demand for Discovery Services, the company has been closely managing staffing levels and introducing cutting-edge capabilities. The company has also been consistently expanding its discovery portfolio through strategic partnerships and acquisitions.

In February 2023, Charles River entered into a multi-program agreement with Pioneering Medicines leveraging AI-Powered Logica to create novel therapies. Through the agreement, Pioneering Medicines will deploy Logica across a portfolio of targets to create optimized small molecules that lead to novel therapies for unmet medical needs. The same month, Charles River and Purespring Therapeutics entered into a plasmid DNA contract development and manufacturing organization (CDMO) collaboration to supports first gene therapy platform targeting kidney diseases. These major developments are expected to have significant contribution to the company’s growth in the first quarter.

The Manufacturing Support segment is likely to have been driven by revenue growth across the Microbial Solutions and Biologics Testing Solutions businesses. The company has been recording strong demand across its portfolio of critical quality control testing solutions within the Microbial Solutions business.

In February 2023, Charles River launched its first Enzyme-Linked Immunosorbent Assay (ELISA) Kit for the detection and the quantitation of residual host cell proteins (HCP) in CHO-based biotherapeutics. In January, the launched eXpDNA plasmid platform aimed at supporting vaccine and advanced therapy clients through clinical trials and beyond. These developments are likely to have driven the company’s revenues in the first quarter, backed by a strong market adoption.

Q1 Estimates

The Zacks Consensus Estimate for the company’s first-quarter 2023 revenues is pegged at $988.1 million, suggesting an 8.12% rise over the year-ago reported figure.

The Zacks Consensus Estimate for the company’s first-quarter 2023 earnings per share of $2.59 indicates a 5.8% fall 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) and 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 #4 (Sell).

Stocks Worth a Look

Here are some medical stocks worth considering as these have the right combination of elements to post an earnings beat this quarter, per our model.

Bio-Rad Laboratories BIO has an Earnings ESP of +0.16% and sports a Zacks Rank #1 at present. It is slated to release first-quarter 2023 results on May 4.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Bio-Rad has a 2023 expected earnings growth rate of 10.3%. BIO’s earnings yield of 3.38% compares favorably with the industry’s (2.78%).

Henry Schein, Inc. HSIC has an Earnings ESP of +0.99% and flaunts a Zacks Rank of #1. Henry Schien is expected to release first-quarter fiscal 2023 results on May 2.

HSIC’s earnings surpassed estimates in three of the trailing four quarters and matched once, the average beat being 2.9%. HSIC’s 2024 growth rate is estimated to be 7.7%.

Teva Pharmaceutical Industries Limited TEVA currently has an Earnings ESP of +14.97% and a Zacks Rank of #2. TEVA is expected to release first-quarter 2023 results on May 2.

TEVA’s 2024 growth rate is estimated to be 4.4%. TEVA’s earnings yield of 28.74% compares favorably with the industry’s (34.35%).

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

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Henry Schein, Inc. (HSIC) : Free Stock Analysis Report

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