Charles River Laboratories Faces Q4 Earnings Amid Analyst Optimism and Sector Challenges

Charles River Laboratories International, Inc. is scheduled to report fourth-quarter 2025 results on Feb. 18, before the market opens. The Zacks Consensus Estimate for revenues is pegged at $985.9 million, suggesting a 1.7% decline from the year-ago reported figure, while the consensus estimate for EPS of $2.33 indicates a 12.4% year-over-year decrease.

An analyst increased the firm's price target on Charles River Laboratories from $197 to $251 while reiterating a Buy rating on January 22. The firm's revised price target suggests a further 38.49% upside from the current levels. This price target adjustment came as part of the firm's broader review and revision of price targets across the contract research organization sector, conducted ahead of the company's Q4 results. In its fourth-quarter earnings preview, the firm expressed confidence in solid quarterly results. The firm suggested that the 2026 guidance could serve as a clearing event for operating conditions, giving investors clearer insights into the company's short-term outlook.

In the last reported quarter, the company's adjusted earnings per share of $2.43 surpassed the consensus estimate by 4.74%. Earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 12.38%. Estimates for earnings have remained unchanged in the past 30 days.

On January 21, Charles River Laboratories announced a new gene therapy collaboration with Gazi University Faculty of Medicine. Under the agreement, the company will provide plasmid DNA for Adeno-associated virus (AAV) production and support in vitro efficacy studies. The collaboration is designed to advance research on Hyperphosphatemic tumoral calcinosis (HTC), a rare inherited disorder that causes high phosphate levels and non-cancerous calcium phosphate deposits in soft tissues, particularly around joints. The company will supply off-the-shelf, royalty-free, animal component-free plasmids, offering Gazi University a ready-to-use solution for early-stage gene therapy programs.

The Corporate Senior Vice President, Global Manufacturing, expressed thoughts on the collaboration by commenting: "We are excited to build a strong collaboration with Gazi University. Leveraging cell and gene therapy CDMO expertise will enable the Faculty of Medicine to test and ultimately transform ground-breaking concepts into real-world therapies."

The company was involved in various collaborations during the fourth quarter, which might have had a positive impact on revenues. In October, Charles River Laboratories and Toxys entered a collaboration that offered Charles River's clients access to ReproTracker, a state-of-the-art human stem cell-based in vitro assay that rapidly and reliably identifies developmental toxicity hazards of new drugs and chemicals. In the aforementioned period, Charles River Laboratories collaborated with X-Chem, Inc. to enhance its hit identification (Hit ID) capabilities and accelerate the discovery of novel therapeutics. The company also collaborated with The Francis Crick Institute on Antibody-Drug Conjugate (ADC) drug discovery and development.

Within the Research Models and Services (RMS) segment, Charles River might have benefited from large research model product revenues, notably from Noveprim. NHP shipments to third-party clients were accelerated during the third quarter. Also, research model services revenues saw a modest uptick, primarily driven by growth in the GEMS business. Despite the uncertainties surrounding NIH budget cuts, revenues from academic and government client segments are likely to have remained favorable in the fourth quarter. Demand from early-stage biotech clients for Charles River Accelerator and Development Lab ("CRADL") services might have been affected by funding challenges, limiting the anticipated utilization of CRADL capacity.

Last year, Charles River's biopharmaceutical clients intensified their restructuring efforts and reprioritized their drug development programs, which put pressure on budgets. Although demand trends appear to be stabilizing, the company observed that smaller biotechs still face cash constraints due to slower biotech funding. The overall pricing environment might have remained unchanged. These factors are expected to have unfavorably impacted the performance of the Discovery and Safety Assessment (DSA) businesses in the fourth quarter of 2025, affecting overall revenues. However, Charles River's demand key performance indicators (KPIs) for small and mid-sized biotech clients are likely to have remained stable.

The Manufacturing Solutions segment is expected to have benefited from the solid performance of the Microbial Solutions business, driven by the Accugenix microbial identification services and Celsis microbial detection platform. Endosafe revenues are likely to have remained strong due to the ongoing client adoption of rapid manufacturing quality-control testing solutions. In December, Charles River announced the second cohort of its Cell & Gene Therapy Incubator Program ("CIP"). This development might have had a positive impact on the fourth-quarter top line. In the previous quarter, commercial revenues from CDMO clients declined. As a result, performance in the CDMO business, along with biologics testing, contributed to a slightly more cautious outlook for the segment than previously anticipated.

Charles River Laboratories provides non-clinical development, drug discovery, and safety testing services across the United States, the Asia-Pacific, Europe, Canada, and internationally. The company operates in the Discovery and Safety Assessment (DSA), Research Models and Services (RMS), and Manufacturing Solutions (Manufacturing) segments. Charles River Laboratories was founded in 1947 and is based in Wilmington, Massachusetts. The company is a leading provider of drug discovery and development services. The company's research model & services segment is the leading provider of animal models for laboratory testing, which breeds and delivers animal research models with specific genetic characteristics for preclinical studies around the world.

Charles River opened at $159.15 on Friday and has a 52-week low of $91.86 and a 52-week high of $228.88. The stock has a 50-day moving average of $201.90 and a 200-day moving average of $169.28. The company has a debt-to-equity ratio of 0.77, a quick ratio of 1.10 and a current ratio of 1.37. The firm has a market capitalization of $7.94 billion and a beta of 1.90.