Charles River Laboratories
) reported second quarter 2014 earnings (excluding special items)
of 97 cents per share, easily beating the Zacks Consensus Estimate
of 82 cents and up from 73 cents in the year-ago quarter.
Charles River Laboratories International, Inc -
Earnings Surprise | FindTheBest
Charles River's net revenues increased 16.5% year over year to
$341.2 million in the second quarter, surpassing the Zacks
Consensus Estimate of $327 million. Foreign currency movements
positively impacted revenues by 1.4% in the second quarter of
Quarter in Detail
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. The acquisitions were completed in Apr 2014.
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 biotechnology companies.
The acquisitions of Argenta and BioFocus contributed 8% to the
top line in the second quarter of 2014. Following the acquisitions,
Charles River revised its reporting segments to ensure better
alignment with the modified business. Charles River now operates
through three segments -- Research Models & Services (RMS),
Discovery and Safety Assessment (DSA), and Manufacturing Support
Revenues from the RMS segment were $133.1 million in the second
quarter of 2014, up 2.6% from the year-ago quarter.
Revenues from the DSA segment were $142.6 million in the second
quarter, up 32.7% year over year driven by the acquisition of
Argenta and BioFocus. The growth in revenues was also driven by
strong demand for the company's safety assessment services from
Revenues for the Manufacturing segment were $65.4 million, up
17.5% year over year. The growth in revenues was driven by
broad-based growth across all businesses, including the Endotoxin
and Microbial Detection, and Biologics Testing Solutions
During the second quarter of 2014, Charles River repurchased 1.5
million shares for $80.5 million, subsequent to which the company
has $48.8 million remaining under its $1.0 billion repurchase
2014 Guidance Upped
Charles River upped its earnings guidance for 2014 based on a
strong second-quarter performance along with gain from limited
partnership investments. The company now expects adjusted earnings
per share between $3.25 and $3.35, up from the earlier estimate of
$3.15-$3.25. The current Zacks Consensus Estimate of $3.20 per
share falls short of the company's increased guidance range.
Charles River reiterated that it expects sales growth of 9%-11%
We are encouraged by the positive second quarter results driven
by higher revenues and operating margin improvement. The company
will continue to focus on its sales efforts for mid-tier
The second consecutive increase in guidance was encouraging as
well. Hence, we expect a strong performance from the company in
Currently, Charles River carries a Zacks Rank #4 (Sell). Stocks
that currently look attractive in the broader healthcare sector
include Allergan (
), AstraZeneca PLC (
), and McKesson Corp. (
). While Allergan sports a Zacks Rank #1 (Strong Buy), the other
two are Zacks Rank #2 (Buy) stocks.
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