Company Reports

Animal research models have been the foundation of Charles River Laboratories' business since 1947, and the company has expanded to provide solutions encompassing research models and related services, drug discovery, preclinical testing, and manufacturing support. It services nearly all top and midtier biopharma players.

Charles River reported second-quarter revenue of $1 billion, a decline of 2.7% from the prior year. Management now anticipates 2026 revenue will decline 3% at the midpoint, an improvement from its previous outlook of negative 4.75%.

Charles River reported first‑quarter revenue of $996 million, up 1.2% year over year, while non‑GAAP operating margin declined 280 basis points. Management lowered guidance for 2026 reported revenue by 50 basis points at the midpoint due to foreign exchange headwinds, implying a decline of 4.75%.

We see Charles River Laboratories' longstanding leadership in preclinical services as being structurally challenged by regulatory and technological change over the next decade, which will reduce the durability of its competitive advantages.

Animal research models have been the foundation of Charles River Laboratories' business since 1947, and the company has expanded to provide solutions encompassing research models and related services, drug discovery, preclinical testing, and manufacturing support. It services nearly all top and mid-tier biopharma players.

Animal research models have been the foundation of Charles River Laboratories' business since 1947, and the company has expanded to provide solutions encompassing research models and related services, drug discovery, preclinical testing, and manufacturing support. It services nearly all top and mid-tier biopharma players.

Charles River Laboratories reported 2025 revenue of just over $4 billion, declining 0.9% from the prior year period. Fourth-quarter revenue dropped 260 basis points on an organic basis from the prior year. Management is guiding to flat to 1.5% revenue growth in 2026.

Charles River Laboratories' third-quarter revenue of $1 billion represented a decrease of 50 basis points from the prior-year period and 264 basis points sequentially. Management announced an update on its strategic review and outlined new initiatives focused on driving efficiency and growth.

Charles River's second-quarter revenue of $1.03 billion represented an increase of 0.6% compared with the prior-year period. Management raised its full-year revenue outlook, now expecting a 1.5% decline at the midpoint compared with 2024, versus its prior guidance of negative 4.5% at the midpoint.

Narrow-moat Charles River Laboratories announced an agreement with Elliott Investment Management to add four new directors to its board and enhance value creation through a strategic review to optimize the company’s performance and drive efficiencies. Investors were spooked last month by the US Food and Drug Administration’s announcement to reduce animal testing for preclinical safety assessments. However, management provided more details on how it plans to advance hybrid study designs by complementing traditional animal studies with technologies such as artificial intelligence, and it will continue to expand its nonanimal platforms to address evolving regulations. Shares soared almost 19% after the earnings update, as investor confidence increased in the firm’s long-term prospects.

We have completed a review of the US Food and Drug Administration's plan to reduce animal testing, which could affect Charles River Laboratories' business, and our fair value estimate for the firm is no longer under review. The FDA's shift away from animal toxicity testing has been decades in development, but new FDA Commissioner Marty Makary is putting a stronger emphasis on the effort. The FDA's road map encourages drug developers to use artificial intelligence models and lab-grown organoids to predict drug behavior. We have lowered our fair value estimate to $155 per share from $215 to account for more conservative revenue growth in the low single digits during our 10-year forecast period. To account for heightened risk for narrow-moat Charles River, we have increased our Morningstar Uncertainty Rating to High from Medium. We still think shares are trading at an attractive entry point, about 30% below our fair value estimate.

Animal research models have been the foundation of Charles River Laboratories' business since 1947, and the company has expanded to provide solutions encompassing research models and related services, drug discovery, preclinical testing, and manufacturing support. It services nearly all top and mid-tier biopharma players.

Charles River Laboratories’ shares declined 28% on April 10 following the US Food and Drug Administration’s announcement to reduce reliance on animal testing for drug development, in favor of alternative methods such as artificial intelligence-driven models and lab-grown human organoid systems. While this development could pose meaningful long-term headwinds for the company, we do not anticipate a material impact on near-term revenue or margins. We expect regulatory implementation to unfold gradually, and adoption of new methods by drug developers will likely proceed with caution. We are putting our Charles River's fair value estimate under review while we assess how this regulatory landscape evolution will affect long-term cash flows.

Narrow-moat Charles River Laboratories ended 2024 with slightly better-than-expected performance amid a challenging macroeconomic environment, and investors sent the stock up 7%. Full-year revenue of $4.05 billion represented about a 2% decrease compared to 2023. Revenue grew by nearly 5% in the research models and services segment and increased by over 6.5% in the manufacturing solutions segment, but these gains were offset by a revenue decrease of 6% in the discovery and safety assessment business. We lowered our fair value estimate to $215 per share from $260 due to softer near-term results from macroeconomic pressures. However, the stock is still trading at an attractive entry point for long-term investors.

Animal research models have been the foundation of Charles River Laboratories' business since 1947, and the company has expanded to provide solutions encompassing research models and related services, drug discovery, preclinical testing, and manufacturing support. It services nearly all top and mid-tier biopharma players.

Narrow-moat Charles River Laboratories continues to experience pressure from cautious client spending amid macroeconomic challenges. A softer demand environment for preclinical testing is particularly weighing on the firm's discovery and safety assessment business as many biopharmaceutical clients have announced restructuring and pipeline reprioritization initiatives. Despite near-term challenges, we think demand trends will stabilize in the long run as macroeconomic issues improve over our 10-year forecast period. We maintain our fair value estimate of $260 per share, and shares are currently trading in 4-star territory, presenting an attractive opportunity for long-term investors.

Narrow-moat Charles River Laboratories continues to experience pressure from cautious client spending amid macroeconomic challenges. Revenue in the second quarter was $1.03 billion, a decrease of 3.2% from the prior-year period primarily due to lower revenue from small and midsize biotech companies. Management no longer expects that overall demand trends will improve during the second half of this year, and it has revised its 2024 guidance. These headwinds will have a particularly negative impact on the discovery and safety assessment business due to a softer demand environment for preclinical testing as many global biopharma clients have announced restructuring programs and are reassessing their budgets due to a variety of factors, including macroeconomic issues, key drugs facing competition, and pending patent expirations.

Narrow-moat Charles River Laboratories has continued to experience pressure from cautious client spending amid macroeconomic challenges. First-quarter revenue was $1.01 billion, a decrease of 1.7% from $1.03 billion in the prior year period. However, there are signs that market trends are stabilizing. According to BioWorld, biotech funding increased to $47.1 billion in the first quarter, more than tripling year over year. The improved funding should lead to additional spending on early-stage programs. We like that Charles River experienced increased proposal activity in the first quarter, and we appreciate that the company has available capacity to start various projects relatively quickly. We maintain our fair value estimate of $260 per share, and shares are currently in trading in 3-star territory, about 12% below our fair value estimate.

Animal research models have been the foundation of Charles River Laboratories' business since 1947, and the company has expanded to provide solutions encompassing research models and related services, drug discovery, preclinical testing, and manufacturing support. It services nearly all top and mid-tier biopharma players.

Narrow-moat Charles River Laboratories ended 2023 with revenue of $4.13 billion, representing growth of nearly 4% from the prior year. The company has continued to experience pressure from cautious client spending amid macroeconomic challenges, as cancellations have been elevated compared with historical levels and customers have reprioritized their pipelines. Despite these near-term challenges, we think these macroeconomic issues will improve over our forecast period. We have a positive long-term outlook based on the company’s leading position in the industry and steadily increasing demand for preclinical outsourcing services as drug development continues to become more complex with a greater focus on biologics and cell and gene therapies. We maintain our fair value estimate of $260 per share, and we now view shares as fairly valued as they have moved into 3-star territory.