Here's How Charles River Stock Is Placed Ahead of Q4 Earnings

Charles River Laboratories International, Inc. CRL is scheduled to report fourth-quarter 2025 results on Feb. 18, before the market opens.

In the last reported quarter, the company’s adjusted earnings per share (EPS) of $2.43 surpassed the Zacks Consensus Estimate by 4.74%. Earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 12.38%.

Q4 Estimates for CRL

The Zacks Consensus Estimate for revenues is pegged at $985.9 million, suggesting a 1.7% decline from the year-ago reported figure.

The Zacks Consensus Estimate for EPS of $2.33 indicates a 12.4% year-over-year decrease.

Estimate Revision Trend Ahead of CRL’s Q4 Earnings

Estimates for earnings have remained unchanged in the past 30 days.

Here’s a brief recap of the Wilmington, MA-based drug development company’s performance leading up to this announcement.

CRL: Factors at Play

The company was involved in various collaboration 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 (Crick) on Antibody-Drug Conjugate (ADC) drug discovery and development.

Research Models and Services (“RMS”)

Within this 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. We anticipate these positive factors to have continued into the fourth quarter as well.

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.

Charles River Laboratories International, Inc. Price and EPS Surprise

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

Our model estimates Charles River’s RMS business revenues to increase 0.5% in the fourth quarter of 2025.

Discovery and Safety Assessment (“DSA”)

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 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.

Our model estimates DSA business revenues to decline 3.9% year over year.

Manufacturing Solutions

The 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. We expect this trend to have persisted in the fourth quarter. 

Our model estimates Charles River’s Manufacturing business revenues to rise 2.3% year over year.

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 not the case here:

Earnings ESP: Charles River has an Earnings ESP of -0.46%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Charles River currently carries a Zacks Rank #3.

Key MedTech Picks

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

Veracyte VCYT has an Earnings ESP of +7.98% and a Zacks Rank #2. The company is set to release fourth-quarter 2025 results on Feb. 25. 

VCYT’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 45.12%. The Zacks Consensus Estimate for the company’s fourth-quarter EPS suggests an increase of 13.9% from the year-ago figure.

Globus Medical GMED has an Earnings ESP of +3.92% and a Zacks Rank #2. The company is expected to release fourth-quarter 2025 results soon.

GMED’s earnings beat estimates in three of the trailing four quarters and missed on one occasion, the average surprise being 16.24%. The Zacks Consensus Estimate for the company’s fourth-quarter EPS implies a surge of 26.2% from the year-ago reported figure.

Merit Medical Systems MMSI has an Earnings ESP of +2.09% and a Zacks Rank #2. The company is slated to release fourth-quarter 2025 results on Feb. 24.

MMSI’s earnings topped estimates in each of the trailing four quarters, the average surprise being 14.1%. The Zacks Consensus Estimate for the company’s fourth-quarter EPS calls for an increase of 3.2% 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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