Charles River Laboratories International, Inc. CRL is scheduled to report fourth-quarter and full-year 2023 results on Feb 14, before market open.
In the last reported quarter, the company’s adjusted earnings per share of $2.72 surpassed the Zacks Consensus Estimate by 15.7%. Earnings surpassed estimates in each of the trailing four quarters, the average beat being 8.43%.
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 continued global demand for research models and associated services. Similar to the last reported quarter, the segment is likely to have benefited from broad-based demand for small research models across global biopharma, biotech and academic and government institutions in all geographic regions.
The service business within RMS is also expected to have witnessed growth in the fourth quarter,banking on small molecule revenue increase across several geographic regions, principally driven by price.
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 the fourth quarter, driving the in-sourcing solutions business within the RMS arm.
However, the results might be largely offset by slower demand from mid-tier clients affected by the broader biopharma demand environment as well as by softer demand from government accounts.
Per our model, Charles River’s RMS business revenues are projected to be $184.9 million for the fourth quarter, suggesting a 5.7% decline year over year.
Charles River Laboratories International, Inc. Price and EPS Surprise
Charles River Laboratories International, Inc. Price and EPS Surprise
Charles River Laboratories International, Inc. price-eps-surprise | Charles River Laboratories International, Inc. Quote
The Discovery and Safety Assessment (DSA) arm is likely to have benefited from growth in the Safety Assessment business through meaningful price increases and higher study volume. The strong non-NHP-related work and post-IND studies are expected to have benefited the company’s performance in the to-be-reported quarter.
However, current market conditions are soft, impacted by the overall soft biopharmaceutical demand environment. This is because clients have been reprioritizing their pipelines and tightening their R&D budgets. This might have marred growth in the fourth quarter. Further, the company earlier expected a modest impact from Non-Human Primates (NHP) supply constraints.
Per our model, Charles River’s DSA business revenues are projected to be $627.9 million in the fourth quarter, implying 9.2% growth year over year.
The Manufacturing Support segment is likely to have been driven by revenue growth across Microbial Solutions. The Accugenix microbial identification platform has been gaining from strength in instrument placements and demand for testing services within the Microbial Solutions business. Further, the cell and gene therapy CDMO (contract development and manufacturing organization) business has been progressing toward its targeted growth rate goal in the past few quarters. We expect this trend to have continued through the fourth quarter.
However, the segment is expected to have experienced softness across the broader end markets due to a post-COVID slowdown from biopharma manufacturers, CDMOs and their suppliers.
Per our model, Charles River’s Manufacturing business revenues are expected to be $181.6 million for the fourth quarter, suggesting a 14.4% decline year over year.
Q4 Estimates
The Zacks Consensus Estimate for the company’s fourth-quarter 2023 revenues is pegged at $985.69 million, suggesting a 10.4% decline over the year-ago reported figure.
The Zacks Consensus Estimate for the company’s fourth-quarter 2023 earnings per share of $2.39 indicates a 19.8% 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 #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 in their upcoming release.
RxSight RXST has an Earnings ESP of +3.85% and a Zacks Rank #2. The company is expected to release fourth-quarter 2023 results soon. You can see the complete list of today’s Zacks #1 Rank stocks here.
RxSight’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 18.25%. The Zacks Consensus Estimate for RXST’s fourth-quarter EPS indicates an increase of 35.7% from the year-ago reported figure.
Veru VERU has an Earnings ESP of +14.29% and a Zacks Rank #2. The company is scheduled to release first-quarter fiscal 2024 results on Feb 8.
Veru’s earnings surpassed estimates in two of the trailing four quarters and lagged in two, with the average surprise being 0.16%. The Zacks Consensus Estimate for Veru’s fiscal 2024 first-quarter revenues indicates an improvement of 107.2% from the year-ago reported figure.
Health Catalyst HCAT has an Earnings ESP of +300.00% and a Zacks Rank #2. The company is expected to release fourth-quarter 2023 results shortly.
Health Catalyst’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 185.42%. The Zacks Consensus Estimate for HCAT’s fourth-quarter 2023 EPS implies an increase of 80% from the year-ago reported figure.
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