Charles River Getting Back on Course

This column was originally published on RealMoney on Dec. 15 at 3:06 p.m. EST. It's being republished as a bonus for TheStreet.com readers. For more information about subscribing to RealMoney, please click here.

Charles River Labs (CRL Quote) surprised the Street last night by raising its 2007 revenue forecast to between 9% and 12%, compared with the 8% consensus forecast. This represents an uptick from recent trends and should help improve investor confidence in the company's near-term fortunes. After what can only be described as an up-and-down year, the company's shares appear due for a rebound following the better-than-expected guidance.

The company also affirmed its earnings outlook for this year and provided initial guidance for 2007. Next year's pro forma earnings are expected to rise 13% to 15% to a range of $2.43 to $2.53 per share; this is likely to provide some upside to the current $2.47 consensus number.

Charles River management was expected to provide a relatively cautious forecast for 2007 after disappointing investors on several occasions over the past year. Importantly, these guidance upgrades do not signal a dramatic change in underlying business trends, as they are largely due to accounting- and acquisition-related factors. Specifically, the earnings lift is due to a 3-cent-per-share accounting change related to the reclassification of ongoing amortization expenses. ...