BofA’s Hartnett says concentrated U.S. stock returns are likely to persist
Investing.com - BofA Securities has raised its price target on Charles River Labs (NYSE:CRL) to $175.00 from $170.00 while maintaining a Neutral rating on the stock. According to InvestingPro data, analyst targets for CRL range from $108 to $200, with the stock currently trading at a P/E ratio of -248.36x. The company maintains a "GOOD" overall financial health score.
The adjustment follows Charles River Labs’ recent quarterly performance, where the company reported mid-single-digit year-over-year growth in gross and net DSA (Discovery (NASDAQ:WBD) and Safety Assessment) bookings. The book-to-bill ratio was 0.82x in the quarter, representing a sequential decline from the first quarter. The company’s revenue reached $4.02 billion in the last twelve months, with a gross profit margin of 34.69%.
Management indicated this decline was expected and attributed it to a sequential increase in cancellations and stronger revenues. When viewing the first half of the year as a whole, the company achieved a 0.93x book-to-bill ratio, which compared favorably to the second half of 2023 (0.85x) and first half of 2023 (0.80x).
The company provided positive qualitative commentary, noting a stabilizing preclinical demand environment and global biopharma trends that have bottomed and are beginning to move upward as pharmaceutical companies progress through restructuring. InvestingPro analysis reveals several positive indicators, including expected net income growth this year and strong cash flow generation. Subscribers can access 8 additional ProTips and comprehensive financial metrics in the Pro Research Report. Charles River Labs also reported better results from mid-sized biotechs that are not dependent on external funding.
In response to these favorable trends, management indicated they have decided to resume some DSA hiring, though they do not expect further improvement in the book-to-bill ratio in the second half of the year, projecting it to remain similar to the first half (between 0.80x-0.93x). The company’s next earnings report is scheduled for August 6, 2025, with analysts forecasting EPS of $9.83 for FY2025.
In other recent news, Charles River Laboratories International, Inc. reported second-quarter earnings that significantly surpassed analyst expectations. The company posted adjusted earnings of $3.12 per share, well above the analyst consensus of $2.50. Revenue reached $1.03 billion, exceeding the expected $984.86 million, and showed a slight 0.6% increase from the same quarter last year. On an organic basis, revenue experienced a 0.5% decline when excluding the 1.2% positive impact from foreign currency translation. Additionally, Charles River Labs raised its full-year outlook following the strong quarterly performance. The company’s recent developments have been positively received, as evidenced by the reaction to the earnings report. These financial results highlight the company’s ability to outperform market expectations.
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