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The research company reported on Monday fourth-quarter earnings of $27.1 million, or 55 cents a share, a swing from a year-earlier loss of $342.4 million, or $5.94 a share.
"Our checks indicate more closures of pharma GLP Tox facilities are on the horizon. These should signal higher demand for outsourced services," Jefferies analysts wrote in a report Tuesday. "However, that has been the story for 3 years now. Low pricing still signals excess. Perhaps pharma is finally shuttering these labs after prolonged and unsuccessful attempts to sell them to CROs."
Shares of Charles River Laboratories were upgraded to
buy from hold by
"The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, revenue growth, notable return on equity and expanding profit margins,"
TheStreet Ratings wrote. "We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Charles River Laboratories has an estimated price-to-earnings ratio for next year of 11.93; the average for biotechnology companies is 28.35. For comparison,
United Therapeutics(UTHR) has a lower forward P/E of 6.31 and
Techne's(TECH) forward P/E is 20.16.
Of the 18 analysts who cover Charles River Laboratories, 14 rated the company a hold. Three analysts gave it a buy rating and one gave it a sell.
TheStreet Ratings gives Charles River Laboratories a B grade with a
$39.15 price target. The stock closed Tuesday at $35.23 and has risen 28.91% year to date.