Charles River Laboratories
) reported first quarter 2014 earnings (excluding special items)
of 82 cents per share, easily beating the Zacks Consensus
Estimate of 74 cents and up from 69 cents in the year-ago
Charles River's net sales increased 2.8% year over year to
$299.4 million in the reported quarter, but short of the Zacks
Consensus Estimate of $302 million. Foreign currency movements
positively impacted sales by 0.4% in the first quarter of
Quarter in Detail
Charles River operates through two segments -- Research Models
& Services (RMS) and Preclinical Services (PCS).
Sales from the RMS segment were $185.6 million in the first
quarter of 2014, up 1.7% from the year-ago quarter. Foreign
currency movement positively sales by 0.2% in the reported
quarter. The increase in RMS segment sales was driven by growth
in the legacy Endotoxin and Microbial Detection (EMD)
Sales from the PCS segment were $113.8 million in the first
quarter, up 4.6% year over year. The improvement in revenues was
driven by higher sales to mid-tier clients mainly due to market
share gains and improved client demand. Foreign currency movement
positively impacted sales by 0.7% in the reported quarter.
During the first quarter of 2014, Charles River repurchased
183,000 shares worth $9.8 million, subsequent to which the
company has $129.3 million remaining under its $1.0 billion
2014 Guidance Upped
Charles River upped its earnings guidance for 2014 to reflect
the acquisition of Argenta and BioFocus. The company expects
adjusted earnings per share between $3.15 and $3.25, up from the
earlier estimate of $3.00-$3.10. The Zacks Consensus Estimate of
$3.14 per share is well within the company's increased guidance
We remind investors that in Mar 2014, Charles River entered
into a definitive agreement to acquire the contract research
organization (CRO) services division of Galapagos NV.
The CRO division of Galapagos NV includes the businesses of
Argenta and BioFocus. Located in the U.K and the Netherlands,
both these businesses specialize in integrated drug discovery
services from target discovery through the delivery of
clinic-ready candidates to a broad range of pharmaceutical and
Charles River now expects sales growth of 9.0%-11.0% in 2014,
up from the previous projected range of 3.0%-5.0%.
We are encouraged by the positive first quarter results.
Demand increased from key customers after a slow first quarter.
The increase in guidance was encouraging as well. Management
indicated positive trends for the second quarter as demand from
its mid-tier biotechnology clients continued to increase due to
improved access to funding along with the company's targeted
sales strategies. Hence, we expect a strong performance from the
company in 2014.
Currently, Charles River carries a Zacks Rank #2 (Buy). Other
stocks that look attractive include
ICON Public Limited Co
) look attractive. All three carry a Zacks Rank #2.
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