Charles River Labs Predicts Sales Decline, Triggering Sharp Stock Drop
Charles River Laboratories anticipates a decrease in annual sales, prompting a significant drop in stock value amid softened demand forecasts for biopharmaceutical clients.
Essential Highlights
- Charles River Laboratories experienced a significant stock decline after revising its full-year sales outlook from growth to a decrease.
- Q2 revenue aligned with market expectations, and profits slightly exceeded estimates, yet the company forecasts reduced demand in the latter half of the year.
- The board sanctioned a fresh $1 billion stock repurchase initiative.
On Wednesday, shares of Charles River Laboratories (CRL) plunged over 12% during intraday trading following the company’s announcement of anticipated sales decline for the fiscal year, contrary to earlier growth projections.
The healthcare diagnostics and research firm reported second-quarter revenue of $1.03 billion, meeting analysts’ forecasts, with net income slightly above expectations at $94.08 million. Both figures represent a decrease compared to last year’s $1.06 billion revenue and $97.02 million net income.
Forecasting Weaker Demand in Latter Half of 2024
CEO James Foster highlighted that while the first half results aligned with internal forecasts, emerging trends indicate a downturn in demand for global biopharmaceutical customers during the second half of the year, contrary to prior optimism.
Consequently, Charles River adjusted its full-year revenue outlook downward, now anticipating a 2.5% to 4.5% decline, a shift from the previous 1% to 4% growth estimate. Earnings per share guidance was also revised lower to a range of $5.65 to $5.95 from an earlier $7.60 to $8.10.
Additionally, the company’s board approved a new $1 billion stock buyback program, replacing the former $1.3 billion plan that was discontinued with approximately $129 million remaining.
Following the announcement, Charles River shares fell 12.2% to $200.98 by 1 p.m. ET on Wednesday, marking a 15% decline since the beginning of the year.
Discover engaging topics and analytical content in Markets News as of 01-08-2024. The article titled " Charles River Labs Predicts Sales Decline, Triggering Sharp Stock Drop " provides new insights and practical guidance in the Markets News field. Each topic is meticulously analyzed to deliver actionable information to readers.
The topic " Charles River Labs Predicts Sales Decline, Triggering Sharp Stock Drop " helps you make smarter decisions within the Markets News category. All topics on our website are unique and offer valuable content for our audience.