Charles River Q2 Earnings Preview: What's in Store for the Stock?

Charles River Laboratories International, Inc. CRL is scheduled to report second-quarter 2025 results on  Aug. 6, before the market opens.

In the last reported quarter, the company’s adjusted earnings per share (EPS) of $2.34 surpassed the Zacks Consensus Estimate by 13.59%. Earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 10.93%.

Q2 Estimates for CRL

The Zacks Consensus Estimate for revenues is pegged at $982.9 million, suggesting a 4.2% decline from the year-ago reported figure.

The Zacks Consensus Estimate for EPS of $2.50 indicates a 10.7% fall year over year.

Estimate Revision Trend Ahead of CRL’s Q2 Earnings

Estimates for Charles River’s second-quarter earnings have increased 1 cent to $2.50 in the past 60 days.

Here’s how the Wilmington, MA-based drug development company has been performing leading up to this announcement.

CRL: Factors at Play

Research Models and Services (“RMS”)

The segment’s revenues in the second quarter may have been affected by the timing of non-human primate (NHP) shipments in China and lower revenues from the Cell Solutions business. On a positive note, revenues for small research models are likely to have increased across all geographic regions, backed by higher pricing. These low-cost, critical tools for biomedical research support Charles River’s ability to continue to realize price increases globally. However, NIH budget cuts could impact client spending levels, potentially limiting revenue growth.

Demand from early-stage biotech clients for Charles River Accelerator and Development Lab (CRADL) services may have remained constrained due to their funding challenges. This is expected to have slowed the anticipated utilization of CRADL capacity in the second quarter, leading to lower revenues.

Our model estimates that Charles River’s RMS business revenues will edge up 0.4% in the second quarter of 2025.

Discovery and Safety Assessment (“DSA”)

The segment has been facing a cautious spending environment for several quarters, as global biopharmaceutical and biotechnology clients continue to reassess their budgets, reprioritize drug pipelines and manage cost structures. While first-quarter results exceeded Charles River’s expectations — with net book-to-bill returning to just above 1X for the first time in more than two years — recent dynamics, such as the federal funding cuts at the NIH and FDA, slower biotech funding and tariffs, have added to broader market uncertainty. These factors are expected to have weighed on DSA revenues in the second quarter of 2025.

Charles River Laboratories International, Inc. Price and EPS Surprise

Charles River Laboratories International, Inc. price-eps-surprise | Charles River Laboratories International, Inc. Quote

Discovery Services may have experienced lower revenues, while a favorable mix is likely to have supported DSA pricing improvements. Quarterly net booking activity is also likely to have improved, aided by higher gross bookings from global biopharma clients and a continued decline in study cancellations, trending toward targeted levels across all client segments. Management earlier noted that the incremental first-quarter bookings were largely for studies with quicker start dates and are expected to benefit revenues in the first half of this year.

Per our model estimate, Charles River’s DSA business revenues are expected to decline 9.5% year over year.

Manufacturing Solutions

Within this segment, the Microbial Solutions business is likely to have witnessed another strong quarter for its portfolio of rapid manufacturing quality control testing solutions, led by Accugenix. Endosafe is expected to have witnessed growth in testing consumables. Furthermore, strong placements of high-throughput, automated NEXUS instruments last year may have continued to drive higher demand for incremental cartridges.

Meanwhile, Charles River’s cell and gene therapy CDMO business may have been pressured by lower revenues from two commercial clients, which reduced the Manufacturing Solutions growth rate by nearly 500 basis points in the first quarter and is expected to have a similar impact for the full year. The Biologics Testing business is also likely to have expanded due to solid booking activity in the first quarter despite facing a slower start.

Our model estimates Charles River’s Manufacturing business revenues will increase 4.5% in the second quarter of 2025.

The company’s businesses are also navigating a difficult macroeconomic backdrop marked by geopolitical pressure, global supply chain and labor market disruptions.  Charles River is now subject to tariffs on imports from its major supplier countries, such as Vietnam, Mauritius and China. These could potentially drive up its costs and expenses, adversely affecting the bottom line in the second quarter.

Earnings Whispers for CRL Stock

Per our proven model, stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP, have a higher chance of beating estimates, which is the case here:

CRL’s Earnings ESP: Charles River has an Earnings ESP of +0.11%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

CRL’s Zacks Rank: Charles River currently carries a Zacks Rank #3.

Other Top MedTech Picks

Here are some other medical stocks worth considering, as these also have the right combination of elements to post an earnings beat this time:

Exact Sciences EXAS has an Earnings ESP of +475.00% and a Zacks Rank #2. The company is slated to release second-quarter 2025 results on Aug. 6.

EXAS’ earnings surpassed estimates in three of the trailing four quarters and missed on one occasion, the average surprise being 48.8%. As per the Zacks Consensus Estimate, the company’s second-quarter EPS is expected to increase 77.8% from the year-ago quarter figure.

Cencora COR has an Earnings ESP of +1.49% and a Zacks Rank #2. The company is set to release third-quarter fiscal 2025 results on Aug. 6.

COR’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 6%. Going by estimates, COR’s fiscal third-quarter EPS is expected to surge 13.2% from the year-ago reported figure.

Cardinal Health CAH has an Earnings ESP of +0.72% and a Zacks Rank #2. The company is slated to release fourth-quarter fiscal 2025 results on Aug. 12.

CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 10.3%. The consensus estimate indicates that the company’s fiscal fourth-quarter EPS will increase 10.3% from the year-ago quarter’s figure.

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This article originally published on Zacks Investment Research (zacks.com).

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