Shares of Charles River Laboratories (CRL) dropped over 12% in intraday trading on Wednesday after the company revised its sales outlook for the full fiscal year, predicting a decline instead of growth.
The health care diagnostics and research firm reported second-quarter revenue of $1.03 billion, matching analysts’ expectations. Profits were slightly above estimates at $94.08 million. However, both figures represented a decrease from the previous year, when revenue was $1.06 billion and net income was $97.02 million.
Anticipating Weaker Demand in Late 2024
CEO James Foster noted that while the company’s first-half performance aligned with internal projections, indicators suggest that demand will weaken in the latter half of the year, contrary to earlier expectations. “We had anticipated an improvement in demand during the second half, but current trends suggest a decline, particularly from our global biopharmaceutical clients,” Foster explained.
As a result, Charles River has revised its guidance for the full fiscal year, now expecting revenue to fall by 2.5% to 4.5%, a significant shift from the previously anticipated growth of 1% to 4%. The company also lowered its earnings per share (EPS) forecast to a range of $5.65 to $5.95, down from the earlier projection of $7.60 to $8.10.
In a move to bolster shareholder value, the company’s board approved a new $1 billion stock buyback plan, replacing the previous $1.3 billion plan, which was halted with approximately $129 million remaining.
Following the announcement, Charles River shares fell 12.2% to $200.98 as of 1 p.m. ET Wednesday. This decline has contributed to a roughly 15% drop in the company’s stock value since the beginning of the year.
