Charles River Labs to divest non-core assets in portfolio refinement

WILMINGTON, Mass. - Charles River Laboratories International, Inc. (NYSE:CRL), with a market capitalization of $8.75 billion, announced Wednesday a series of strategic initiatives aimed at strengthening its portfolio and improving financial performance following a comprehensive review by its Board of Directors.

The company plans to divest underperforming or non-core businesses representing approximately 7% of its estimated 2025 revenue. These divestitures, once completed, are expected to result in non-GAAP earnings per share accretion of at least $0.30 on an annualized basis, before any reinvestment of proceeds. This move comes as analysts forecast the company will return to profitability with an EPS of $10.32 for fiscal year 2025, despite reporting a loss of $1.37 per share over the last twelve months.

Charles River also outlined additional cost-saving measures expected to generate incremental net savings of approximately $70 million annually by 2026. These initiatives will focus on process improvement, procurement synergies, and implementing a global business services model. This comes on top of previous restructuring efforts that the company projects will yield about $225 million in cumulative, annualized cost savings by 2026.

The Board approved a new $1 billion stock repurchase authorization in October, replacing a previous authorization under which the company had repurchased $450.7 million in common stock since August 2024.

"We are executing a focused plan to enhance long-term value by building upon the core strengths of our unique portfolio that spans basic research, early-stage drug development, and manufacturing solutions," said James C. Foster, Chair, President and Chief Executive Officer of Charles River Laboratories.

The company indicated it will continue to invest in areas aligned with its core competencies across its three business segments through strategic acquisitions, technology partnerships, and internal development. Focus areas include bioanalysis, in vitro services including new approach methodologies, and geographic expansion.

Charles River plans to provide a more comprehensive business update at an Investor Day in 2026, including progress on these initiatives and updated long-term financial targets, according to the press release statement.

In other recent news, Charles River Laboratories International, Inc. has announced a strategic collaboration with X-Chem, Inc. to enhance its drug discovery capabilities. This partnership will provide Charles River clients with access to X-Chem’s DNA-encoded library platform, which includes over 15 billion compounds. In another development, Charles River has formed a global Scientific Advisory Board to advance New Approach Methodologies, potentially reducing reliance on animal testing. The board will be led by Dr. Namandjé N. Bumpus, a former Chief Scientist at the FDA.

In the realm of analyst evaluations, TD Cowen has maintained its Buy rating for Charles River while raising the stock price target to $205. William Blair has upgraded the company’s stock rating to Outperform, citing a more favorable environment for pharmaceutical outsourcing. Additionally, Jefferies upgraded Charles River’s rating from Hold to Buy, with a new price target of $195, due to improved Discovery and Safety Assessment bookings. These developments reflect a range of strategic and market-driven factors impacting the company.

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