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Here's How Charles River (CRL) is Placed Ahead of Q2 Earnings
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Charles River Laboratories International, Inc. (CRL - Free Report) is scheduled to report second-quarter 2024 results on Aug 7, before market open.
Earnings Surprise History
In the last reported quarter, the company’s adjusted earnings per share of $2.27 surpassed the Zacks Consensus Estimate by 10.7%. Earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.92%.
Q2 Estimates
The Zacks Consensus Estimate for revenues is pegged at $1.03 billion, suggesting a 3.3% decline from the year-ago reported figure.
The Zacks Consensus Estimate for earnings per share of $2.39 indicates an 11.2% decline year over year.
Estimate Revision Trend Ahead of Earnings
Estimates for Charles River’s second-quarter earnings have remained unchanged at $2.39 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
The sustained worldwide need for research models and related services is likely to have acted as a catalyst for the Research Models and Services (“RMS”) market segment. Similar to the last reported quarter, the segment might have earned profit from the widespread need for small research models in all geographic regions.
Geographically, the current market environment is projected to constrain unit volume growth in the small research model business in North America and Europe. As a result, the company aims to drive the majority of its growth through moderate price increases. In China, the company expects to have sustained strong demand for compact models and related services despite macroeconomic challenges.
Note that there was a timing shift with NHP shipments that accelerated into the first quarter. This might have acted as a headwind in the second quarter.
In the previous reported quarter, CRL’s Insourcing Solutions, or IS, generated high revenues, led by the Charles River Accelerator and Development Lab (“CRADL”) operations. Charles River also signed new contracts for the IS Vivarium management solutions.
We anticipate CARDL to have maintained its growth momentum in the second quarter as well, driving the in-sourcing solutions business within the RMS arm. In June 2024, Charles River opened a new CRADL facility in Somerville, MA. We expect this development to have bolstered the company’s growth in the second quarter.
Per our model, Charles River’s RMS business revenues are projected to be $194.2 million for the quarter, suggesting a 7.5% decline year over year.
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.
In April 2024, Charles River launched Patholytix Foresight, a non-clinical artificial intelligence decision support tool, developed in collaboration with Deciphex.
By combining Deciphex’s digital pathology solutions with Charles River’s robust non-clinical pathology programs, clients of both organizations will have access to the technology-driven capabilities to accelerate primary evaluation and peer review in toxicologic pathology assessment. This is likely to have had a positive impact on the company’s performance in the quarter to be reported.
The current market conditions are softdue to the overall low biopharmaceutical demand environment. This might have marred growth of the company’s DSA business segment.
Charles River Laboratories International, Inc. Price and EPS Surprise
However, the company, on its first-quarter earnings call, highlighted that biotech funding had significantly increased to approximately $23 billion in the quarter, with signs of demand improvement later this year.
Per our model, Charles River’s DSA business revenues are projected to be $637.7 million in the second quarter, suggesting a 3.9% decline year over year.
The Manufacturing Support segment is likely to have been driven by revenue growth across Microbial Solutions and Biologics Testing businesses. 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 throughout the quarter under review.
We are also upbeat about Charles River’s contract development and manufacturing organization (“CDMO”) collaborations in the quarter to be reported. The company inked a Good Manufacturing Practice (“GMP”) plasmid DNA CDMO agreement with Ship of Theseus (April 2024).
The partnership will enable the latter to leverage Charles River’s premier expertise to manufacture GMP plasmid DNA to serve as the active drug substance for its lead candidate.
Along with this, Charles River was also involved in a plasmid DNA CDMO collaboration with Axovia Therapeutics Ltd (April 2024). In June 2024, Charles River signed a plasmid DNA and retrovirus vector production program Captain T Cell. This expansion of the company's Manufacturing Support business is likely to have had a positive impact on its second-quarter performance.
Per our model, Charles River’s Manufacturing business revenues are expected to be $191.3 million for the to-be-reported quarter, suggesting 2.6% growth year over year.
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 a higher chance of posting an earnings beat. 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 this reporting cycle:
The company is set to release second-quarter 2024 results on Aug 5.
HIMS’ earnings surpassed estimates in three of the trailing four quarters and missed the same once, the average surprise being 79.17%. The Zacks Consensus Estimate for second-quarter EPS implies a surge of 266.7% from the year-ago quarter’s reported figure.
QIAGEN (QGEN - Free Report) has an Earnings ESP of +2.25% and a Zacks Rank #2 at present. The company is slated to release second-quarter results on Jul 31.
QGEN’s earnings surpassed estimates in three of the trailing four quarters and missed the same once, the average surprise being 1.70%. The company has a long-term earnings growth rate of 6.10% compared to the industry’s 20.3%.
Penumbra (PEN - Free Report) has an Earnings ESP of +0.08% and a Zacks Rank #2 at present. The company is scheduled to release second-quarter results on Jul 30.
The company’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 25.97%. The Zacks Consensus Estimate for PEN’s second-quarter EPS is pegged at 56 cents, indicating an improvement of 30.2% from the year-ago reported figure.
Image: Bigstock
Here's How Charles River (CRL) is Placed Ahead of Q2 Earnings
Charles River Laboratories International, Inc. (CRL - Free Report) is scheduled to report second-quarter 2024 results on Aug 7, before market open.
Earnings Surprise History
In the last reported quarter, the company’s adjusted earnings per share of $2.27 surpassed the Zacks Consensus Estimate by 10.7%. Earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.92%.
Q2 Estimates
The Zacks Consensus Estimate for revenues is pegged at $1.03 billion, suggesting a 3.3% decline from the year-ago reported figure.
The Zacks Consensus Estimate for earnings per share of $2.39 indicates an 11.2% decline year over year.
Estimate Revision Trend Ahead of Earnings
Estimates for Charles River’s second-quarter earnings have remained unchanged at $2.39 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
The sustained worldwide need for research models and related services is likely to have acted as a catalyst for the Research Models and Services (“RMS”) market segment. Similar to the last reported quarter, the segment might have earned profit from the widespread need for small research models in all geographic regions.
Geographically, the current market environment is projected to constrain unit volume growth in the small research model business in North America and Europe. As a result, the company aims to drive the majority of its growth through moderate price increases. In China, the company expects to have sustained strong demand for compact models and related services despite macroeconomic challenges.
Note that there was a timing shift with NHP shipments that accelerated into the first quarter. This might have acted as a headwind in the second quarter.
In the previous reported quarter, CRL’s Insourcing Solutions, or IS, generated high revenues, led by the Charles River Accelerator and Development Lab (“CRADL”) operations. Charles River also signed new contracts for the IS Vivarium management solutions.
We anticipate CARDL to have maintained its growth momentum in the second quarter as well, driving the in-sourcing solutions business within the RMS arm. In June 2024, Charles River opened a new CRADL facility in Somerville, MA. We expect this development to have bolstered the company’s growth in the second quarter.
Per our model, Charles River’s RMS business revenues are projected to be $194.2 million for the quarter, suggesting a 7.5% decline year over year.
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.
In April 2024, Charles River launched Patholytix Foresight, a non-clinical artificial intelligence decision support tool, developed in collaboration with Deciphex.
By combining Deciphex’s digital pathology solutions with Charles River’s robust non-clinical pathology programs, clients of both organizations will have access to the technology-driven capabilities to accelerate primary evaluation and peer review in toxicologic pathology assessment. This is likely to have had a positive impact on the company’s performance in the quarter to be reported.
The current market conditions are softdue to the overall low biopharmaceutical demand environment. This might have marred growth of the company’s DSA business segment.
Charles River Laboratories International, Inc. Price and EPS Surprise
Charles River Laboratories International, Inc. price-eps-surprise | Charles River Laboratories International, Inc. Quote
However, the company, on its first-quarter earnings call, highlighted that biotech funding had significantly increased to approximately $23 billion in the quarter, with signs of demand improvement later this year.
Per our model, Charles River’s DSA business revenues are projected to be $637.7 million in the second quarter, suggesting a 3.9% decline year over year.
The Manufacturing Support segment is likely to have been driven by revenue growth across Microbial Solutions and Biologics Testing businesses. 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 throughout the quarter under review.
We are also upbeat about Charles River’s contract development and manufacturing organization (“CDMO”) collaborations in the quarter to be reported. The company inked a Good Manufacturing Practice (“GMP”) plasmid DNA CDMO agreement with Ship of Theseus (April 2024).
The partnership will enable the latter to leverage Charles River’s premier expertise to manufacture GMP plasmid DNA to serve as the active drug substance for its lead candidate.
Along with this, Charles River was also involved in a plasmid DNA CDMO collaboration with Axovia Therapeutics Ltd (April 2024). In June 2024, Charles River signed a plasmid DNA and retrovirus vector production program Captain T Cell. This expansion of the company's Manufacturing Support business is likely to have had a positive impact on its second-quarter performance.
Per our model, Charles River’s Manufacturing business revenues are expected to be $191.3 million for the to-be-reported quarter, suggesting 2.6% growth year over year.
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 a higher chance of posting an earnings beat. 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 this reporting cycle:
Hims & Hers Health (HIMS - Free Report) has an Earnings ESP of +19.28% and a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company is set to release second-quarter 2024 results on Aug 5.
HIMS’ earnings surpassed estimates in three of the trailing four quarters and missed the same once, the average surprise being 79.17%. The Zacks Consensus Estimate for second-quarter EPS implies a surge of 266.7% from the year-ago quarter’s reported figure.
QIAGEN (QGEN - Free Report) has an Earnings ESP of +2.25% and a Zacks Rank #2 at present. The company is slated to release second-quarter results on Jul 31.
QGEN’s earnings surpassed estimates in three of the trailing four quarters and missed the same once, the average surprise being 1.70%. The company has a long-term earnings growth rate of 6.10% compared to the industry’s 20.3%.
Penumbra (PEN - Free Report) has an Earnings ESP of +0.08% and a Zacks Rank #2 at present. The company is scheduled to release second-quarter results on Jul 30.
The company’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 25.97%. The Zacks Consensus Estimate for PEN’s second-quarter EPS is pegged at 56 cents, indicating an improvement of 30.2% from the year-ago reported figure.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.