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Charles River (CRL) Q2 Earnings to Mirror Broad-Based Demand

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·4 min read
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Charles River Laboratories International, Inc. CRL is set to report second-quarter 2021 results on Aug 4, before market open.

In the last reported quarter, the company’s earnings of $2.53 beat the Zacks Consensus Estimate by 15.53%. Over the trailing four quarters, its earnings outperformed the Zacks Consensus Estimate on all occasions, the average beat being 20.53%.

Let’s take a look at how things have shaped up prior to this announcement.

Factors at Play

Since the beginning of 2021, Charles River has been witnessing strong recovery of its Research Models and Services (RMS) business. In the recent months, this business has been experiencing broad-based growth across all client segments, with biotech clients leading the way, courtesy of continued benefits from a robust funding environment. The RMS business in China had an exceptional first quarter even after normalizing for last year's COVID-19 impact, driven by resurgence in demand across all segments. Further, Biomedical research in China returned to pre-COVID levels, and in some areas, even at greater levels. In the United States and Europe, client order activity rebounded. The company’s Q2 top-line result is expected to reflect these improvements as well.

Charles River Laboratories International, Inc. Price and EPS Surprise

Charles River Laboratories International, Inc. Price and EPS Surprise
Charles River Laboratories International, Inc. Price and EPS Surprise

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

The Zacks Consensus Estimate for RMS’ Q2 revenues is pegged at $169 million, projecting a 44.4% improvement from the year-ago reported figure.

Within the Discovery and Safety Assessment (DSA) business too, the company has been experiencing broad-based demand for both Discovery as well as Safety Assessment. In the second quarter, the Safety Assessment business is particularly expected to have performed well, reflecting strong demand from both biotech and global biopharma clients as well as favorable price increases. The Discovery business is expected to report a strong Q2 led by broad-based demand for oncology, early discovery and CNS services. Bookings and proposal volume reached record highs in the first quarter, with strength across all regions and major service areas. Bookings increased substantially more than the company’s target. With the overall DSA business scenario remaining same through April to June, we expect this trend to have continued in Q2.

The Zacks Consensus Estimate for DSA’s Q2 revenues is pegged at $510 million, indicating a 15.1% improvement from the year-ago reported figure.

Within Manufacturing Support, both Biologics Testing Solutions and Microbial Solutions businesses are expected to have recorded strong revenue growth. As demand for COVID-19 vaccine testing is intensifying, the Biologics business in Q2 is likely to have benefited from robust market demand for testing cell, gene therapies and COVID-19 therapeutics. Within Microbial Solutions, the company is expected to have experienced strong demand for Endosafe endotoxin testing systems, cartridges and core reagents for all geographic regions in Q2. However, the company might have suffered from the delayed instrument installations resulting from COVID-19 restrictions.

The Zacks Consensus Estimate for Manufacturing Support’s Q2 revenues is pegged at $174 million, projecting 41.5% improvement from the year-ago reported figure.

Q2 Estimates

The Zacks Consensus Estimate for second-quarter 2021 revenues is pegged at $867.2 million, suggesting 27.04% increase from the year-ago reported figure.

The Zacks Consensus Estimate for the company’s second-quarter 2021 earnings per share of $2.39 indicates a 51.27% increase from the year-ago figure.

What Our Model Suggests

Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has higher chances of beating estimates. However, this is not the case here as you can see:

Earnings ESP: Charles River has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #2.

Stocks Worth a Look

Here are a few medical stocks worth considering as these have the right combination of elements to beat on earnings this reporting cycle.

Globus Medical, Inc. GMED has an Earnings ESP of +2.51% and a Zacks Rank of 2. The company is slated to release its second-quarter 2021 results on Aug 4. You can see the complete list of today’s Zacks #1 Rank stocks here.

ResMed Inc. RMD has an Earnings ESP of +2.40% and a Zacks Rank of 2, at present. The company is slated to release its fourth-quarter fiscal 2021 results on Aug 5.

Henry Schein, Inc. ZBH has an Earnings ESP of +0.91% and is a Zacks #2 Ranked stock. The company is slated to release its second-quarter 2021 results on Aug 3.


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