On Tuesday, TD Cowen analysts adjusted their outlook for shares of Charles River Laboratories International Inc. (NYSE: CRL), reducing the price target from $227.00 to $182.00 while maintaining a Hold rating on the stock.
The adjustment follows a preliminary guide suggesting that the company may be further from an operational low point than previously thought, with expectations of continued declining performance into 2025.
The revised price target comes in response to anticipated revenue pressures from the company's Discovery (NASDAQ:WBD) Services and Manufacturing Solutions (DSA & CDMO) segments. Analysts at TD Cowen have also revised their earnings per share (EPS) estimate for 2025 to $9.39, down from the prior estimate of $10.39. This revision reflects the additional uncertainty stemming from potential regulatory changes affecting the industry.
Specifically, the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) has proposed a global ban on non-human primates (NHPs) from Cambodia, which analysts estimate could create an incremental headwind to Charles River Labs (NYSE:CRL)' 2025 EPS in the range of $1.00 to $1.30. This represents approximately 10% to 14% of the analysts' EPS estimate and could pose significant challenges if the situation remains unmitigated.
In light of these factors, TD Cowen has adjusted its adjusted EPS estimates for 2024 and 2025 to $10.16 and $9.39, respectively, from the previous figures of $10.20 and $10.39. The new price target of $182 is based on a revised discounted cash flow (DCF) analysis, which suggests that the shares could trade at 19 times the adjusted 2025 EPS estimate of $9.39.
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