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On Monday, Redburn-Atlantic shifted its outlook on Charles River Laboratories International Inc. (NYSE: CRL), upgrading the stock from Sell to Neutral and raising the price target to $188 from the previous $171. The adjustment comes as the firm observes signs of stabilization in the company’s Discovery (NASDAQ:WBD) and Safety Assessment (DSA) segment, following a prolonged period of challenges. The company, with a market capitalization of $8.45 billion and annual revenue of $4.05 billion, has shown resilience despite market volatility, with a beta of 1.37.
The research firm noted that the stock’s significant underperformance has now been largely factored into market expectations, reducing the potential for further downside. According to Redburn-Atlantic, the current valuation of Charles River Labs (NYSE:CRL) stock stands at approximately 16 times the estimated earnings per share (EPS) for the year 2026. InvestingPro data reveals the stock currently trades at a P/E ratio of 824.4x, reflecting high growth expectations. For deeper insights into CRL’s valuation metrics and growth potential, investors can access comprehensive analysis through InvestingPro’s detailed research reports.
The analysts at Redburn-Atlantic have based their new price target on a Discounted Cash Flow (DCF) analysis, which suggests a potential upside of 13% for the stock. The firm’s commentary indicated that for a more bullish stance on Charles River Labs, evidence of growth resumption would be necessary, although the timing of such a turnaround remains uncertain. Notably, InvestingPro analysis indicates the stock is currently undervalued, with 11 analysts recently revising their earnings expectations downward for the upcoming period.
Charles River Laboratories has been navigating through a period where its DSA segment experienced weaker demand. However, the latest analyst upgrade suggests that this trend may be coming to an end, potentially heralding a more stable phase for the company.
Investors and market watchers will be keeping a close eye on Charles River Labs as it progresses through 2025, looking for signs of growth that could influence future evaluations and stock performance.
In other recent news, Charles River Laboratories International reported its fourth-quarter 2024 earnings, surpassing analyst expectations with an earnings per share (EPS) of $2.66 against a forecast of $2.54. Revenue also exceeded projections, reaching $1 billion compared to the anticipated $985.18 million. Evercore ISI revised its price target for Charles River to $175 from $195, maintaining an "In Line" rating, acknowledging the company’s realistic outlook for 2025. The firm noted that Charles River’s fourth-quarter earnings surpassed low expectations, with management providing a reasonable outlook for 2025 despite demand constraints. Additionally, Charles River entered into a partnership with Singapore General Hospital to provide master cell banking and next-generation sequencing services for developing CAR T-cells from cord blood. This collaboration aims to advance cancer therapies, highlighting Charles River’s role in the healthcare sector. Furthermore, top executives at Charles River, including CEO James C. Foster, purchased significant amounts of company stock, reflecting confidence in the company’s strategic direction. These transactions occurred after terminating their respective Rule 10b5-1 Trading Plans, designed for predetermined stock sales.
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