Charles River Laboratories International, Inc. CRL is scheduled to report fourth-quarter 2024 results on Feb.19, before market open.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

In the last reported quarter, the company’s adjusted earnings per share (EPS) of $2.59 surpassed the Zacks Consensus Estimate by 6.6%. Earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 9.35%.

CRL’s Q4 Estimates

The Zacks Consensus Estimate for revenues is pegged at $977.4 million, suggesting a 3.6% decline from the year-ago reported figure.

The Zacks Consensus Estimate for EPS of $2.52 indicates a 2.4% rise year over year.

Estimate Revision Trend Ahead of Earnings

Estimates for fourth-quarter earnings have moved south 0.4% to $2.52 per share in the past 30 days.

Let's take a look at how things might have shaped up for the MedTech major prior to the announcement. 

Factors at Play

In the third quarter, the company’s Research Models and Services (RMS) segment experienced revenue growth, driven by the benefit of higher pricing and small model sales volume in China. However, this was largely offset by a revenue decline for research model services and cell solutions. We expect the company to have maintained this trend in the fourth quarter as well. 

Revenues for small models continued to increase in geographies like North America and Europe during the third quarter. Despite the macroeconomic pressures, business in China was resilient, driven by share gains associated with geographic expansions. Due to a dull biopharma demand environment, research model services experienced a modest revenue decline in the third quarter in both GEMS and CRADL. We expect these trends to have continued in the fourth quarter. 

Our model estimates Charles River’s RMS business revenues to be $203  million for the quarter, suggesting a 3.7% improvement year over year.

The Discovery and Safety Assessment (DSA) arm is likely to have maintained the trend of revenue decline during the third quarter, caused by lower revenues in both the Discovery Services and Safety Assessment businesses. However, global biopharmaceutical clients rebounded in the third quarter and biotech trends remained stable. In line with this, the DSA backlog has been decreasing sequentially.

In the fourth quarter, Charles River launched Retrogenix Non-Human Protein Library to help biopharmaceutical clients assess off-target binding to a non-human proteome to de-risk in vivo studies and aid in non-human species selection. Additionally, it entered into an agreement with H. Lundbeck A/S to utilize Logica to progress critical brain disease research.

The company initiated several collaboration agreements in the previous quarter to boost the DSA segment. These include a collaboration with Autobahn Labs, a virtual accelerator for academic biotech, and a five-year strategic collaboration with Insightec, a global healthcare company dedicated to using focused ultrasound to transform patient care.

Additionally, Charles River entered into a strategic collaboration with CEBINA GmbH, Central European Biotech Incubator and Accelerator in September, focusing on identifying and advancing pioneering academic research projects with the potential to create new drugs and innovative technologies in the field of neurodegeneration. 

Charles River Laboratories International, Inc. Price and EPS Surprise

Charles River Laboratories International, Inc. price-eps-surprise | Charles River Laboratories International, Inc. Quote

We expect these developments to have a positive impact on the company’s fourth-quarter revenues.

Per our model estimate, Charles River’s DSA business revenues should be $563.1 million in the fourth quarter, suggesting a 10% decline year over year.

The Manufacturing Solution segment is likely to have been driven by revenue growth across all its businesses. 

In the third quarter, the contract development and manufacturing organization business within the segment performed well, particularly for cell therapy, and client interest remained strong. Also, the Biologics Testing business performed well, driven by demand for core testing activities, including cell banking, viral clearance, and viral safety testing. 

The Microbial Solutions business continued to grow due to demand for Endosafe testing consumables and improved instrument placements. As per management, the business rebounded from the more challenging market environment last year. We expect this trend to have continued through the quarter under review.

Our model estimates Charles River’s Manufacturing business revenues to be $204.7 million, suggesting 6.6% growth year over year.

What Our Model Suggests for CRL

Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP, has a higher chance of beating on earnings, which is not the case here.

Earnings ESP: Charles River has an Earnings ESP of -0.60%. 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 #3.

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 reporting cycle.

Argenx ARGX has an Earnings ESP of +44.82% and a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here. 

The company is expected to release fourth-quarter 2024 results shortly. The Zacks Consensus Estimate for EPS implies a surge of 196.4% from the year-ago quarter’s reported figure.

Arcutis Biotherapeutics ARQT has an Earnings ESP of +7.97% and a Zacks Rank #2 at present. The company is expected to release fourth-quarter 2024 results shortly. ARQT’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 17.46%. 

Axogen AXGN has an Earnings ESP of +36.36% and a Zacks Rank #3 at present. The company is expected to release fourth-quarter 2024 results shortly. The Zacks Consensus Estimate for EPS implies a surge of 166.7% from the year-ago quarter’s reported figure.

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