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Quote this valuation with its source: Fair value, Potential value and the price at analysis.
FAQ
CRL — frequently asked questions
Is Charles River Laboratories International Inc. overvalued?
In our latest published analysis dated 2026-09-20, CRL looks meaningfully overvalued. The price recorded at analysis is 278 USD versus our fair value of 131 USD; the high endpoint is presented separately as potential value of 158 USD. That implies roughly 52.8% downside to fair value at that date.
Our latest published report, analyzed 2026-09-20, gives CRL a fair value of 131 USD and a potential value of 158 USD. The conclusion is triangulated across multiple valuation models and weighted by reliability for Charles River Laboratories International Inc.'s archetype; it is a dated research output, not a live price.
Should I buy CRL now?
Our latest published rating for CRL, analyzed 2026-09-20, is Sell. Charles River Laboratories International Inc. looks meaningfully overvalued at the analysis-date price of 278 USD versus fair value of 131 USD; potential value is 158 USD. This is research for educational purposes, not personalized investment advice.
What are the biggest risks for CRL?
The dedicated bear-case section in our report analyzed 2026-09-20 documents Charles River Laboratories International Inc.'s material risks, evidence, thresholds, and thesis-invalidation conditions. Scenario-specific explanations remain in that section so the report does not repeat or decontextualize them elsewhere.
What is CRL's rating?
Our latest published rating for CRL, analyzed 2026-09-20, is Sell, with a published moat assessment of 6.5/10 (Narrow). It reflects our fair value of 131 USD, the potential value of 158 USD, and the price recorded at analysis (278 USD).
Ten raport nie został jeszcze przetłumaczony. Odśwież za kilka minut, gdy kolejka tłumaczeń go przetworzy.
§1 Podsumowanie wykonawczeEN
Odpowiedź w 30 sekundSell
Cena a wartość
Cena
$278.06
Wartość godziwa
$131.31
Wartość potencjalna
$158.12
Stan na
2026-09-18
Dlaczego to może zadziałać
A rapid recovery in global biopharmaceutical venture funding and capital market access that drives accelerated IND-enabling study starts, allowing Discovery and Safety Assessment ($2,402.89M revenue) to generate powerful operational leverage above its 17.67% segment margin ($424.56M operating income), combined with an operational turnaround in Manufacturing Support (-$184.28M FY2025 loss) and rapid balance sheet debt paydown.
Co zmieniłoby naszą ocenę
Discovery and Safety Assessment revenue contracting below -5.0% YoY over the next 12 months.
We rate Charles River Laboratories International Inc. Sell. Shares trade far above our Fair value estimate, reflecting market expectations of an aggressive operational turnaround that is not supported by near-term fundamentals.
Our Sell rating means ordinary investors should liquidate existing holdings and avoid committing new capital to the stock. While Charles River is an industry leader in preclinical testing, its elevated valuation leaves investors vulnerable to substantial capital losses.
The report was prepared at a price of $278.06 on September 18, 2026. Our house conclusion establishes a Fair value of $131.31 and a Potential value of $158.12. The report-date price trades at an upside of -52.8% to Fair value, or an 111.8% premium above our fundamental midpoint estimate, standing well above even our Potential value.
The primary risk that would accelerate downside is a continued contraction in preclinical study volumes driven by early-stage biopharmaceutical funding freezes. If Discovery and Safety Assessment revenue falls more than 5% year over year from its FY2025 level of $2,402.89M, high fixed facility expenses will cause operating profit to de-leverage. Combined with ongoing operating losses in Manufacturing Support, which lost $184.28M in FY2025, and debt service on $3,065.51M in total debt, cash flow available to equity holders would decline significantly.2,6
The strongest reason the business can recover toward Potential value of $158.12 is its entrenched position in safety assessment protocols and proprietary research models. Because drug developers face steep regulatory costs and time delays if they switch testing providers during safety trials, Charles River generated $518.49M in free cash flow in FY2025. If biotechnology funding rebounds and management eliminates manufacturing losses, operating margins could normalize toward peer levels of 15.5%, increasing earnings per share and supporting valuation recovery over time.4
High Regulatory Switching Costs
Preclinical toxicology and safety assessment protocols are embedded directly into regulatory filings with global authorities. Core Discovery and Safety Assessment generated $2,402.89M in FY2025 revenue and $424.56M in segment operating income, as sponsors face severe timeline delays and validation risks if switching CRO partners mid-protocol.6
Proprietary Research Models and Barrier Facility Network
Research Models and Services generated $846.08M in FY2025 revenue and $44.57M in operating profit. CRL's biosecure animal breeding facilities and genetically defined strains represent an essential input for biomedical research that cannot be easily replicated by clinical peers like DGX.3,6
Global Scale and Regulatory Footprint
International revenue across Europe ($1,102.70M), Canada ($501.03M), and Asia-Pacific ($205.02M) provides multi-jurisdictional compliance capabilities that small specialized competitors cannot match.6
Rekomendacja domu
We rate Charles River Laboratories Sell because the share price of $278.06 stands at an unsustainable 111.8% premium to fundamental Fair value of $131.31 amid near-term revenue contraction and substantial balance sheet debt.
§2 Scenariusz negatywnyEN
Under a severe capital-cycle stress test combining a 500 bps revenue headwind in Discovery and Safety Assessment ($2,402.89M in FY2025), sustained losses in Manufacturing Support (-$184.28M in FY2025), and a credit spread shock raising WACC above 13.0% from 11.05%, Charles River's operating cash flow ($737.65M in FY2025) would be largely absorbed by capital expenditures ($219.15M in FY2025) and debt service on $3,065.51M total debt. In this downside pathway, consolidated operating margin remains suppressed in the mid-single digits rather than recovering toward the 15.5% industry benchmark, equity value compresses toward $110.15, and multiple derating eliminates near-term valuation support.
Preclinical study cancellations and postponements force operating de-leveraging in safety assessment
Manufacturing Support continues to record operating losses and requires further restructuring
Refinancing friction on balance sheet debt increases overall cost of capital
In the bear scenario, prolonged capital scarcity across early-stage biotechnology sponsors forces sustained pipeline prioritization and study deferrals, suppressing Discovery and Safety Assessment volumes. High fixed barrier-facility costs trigger severe operating de-leveraging while ongoing losses in contract manufacturing prevent margin recovery. Furthermore, debt refinancing under elevated benchmark interest rates increases capital costs and restricts discretionary cash flow, driving equity value significantly below Fair value. Disconfirmation of this downside path would require an immediate inflection in early-stage preclinical study bookings and rapid segment breakeven in manufacturing support.
Jak ta teza może się załamać
Accelerated Preclinical Study Cancellations and Volume Contraction
Discovery and Safety Assessment revenue was $2,402.89M in FY2025. If biopharma funding freezes cause cancellations driving DSA revenue growth below -5.0% YoY over the next 12 months, high fixed facility costs trigger operating de-leveraging.6
FV impact
-7.9%
Revenue and EPS growth 5 points lower for five years
Trigger
Within 12 months
Sygnały wczesnego ostrzegania do monitorowania
Pięć zdarzeń, które osłabiłyby naszą tezę inwestycyjną.
Accelerating preclinical study cancellations and client trial deferrals due to persistent biopharma capital constraints, causing severe operating de-leveraging.
Charles River Laboratories commands an entrenched competitive moat rooted in high regulatory switching costs and specialized infrastructure across early-stage drug discovery and preclinical safety assessment. When biopharmaceutical sponsors initiate good laboratory practice (GLP) toxicology studies to support Investigational New Drug (IND) applications, the protocols, control data, and regulatory submissions are inextricably linked to specific testing facilities and validated animal model strains. Transferring ongoing studies to an alternate provider introduces substantial regulatory audit risk, validation costs, and potential development delays that sponsors rarely absorb willingly. This dynamic protects the Discovery and Safety Assessment segment, which generated $2,402.89M in FY2025 revenue and maintained a 17.67% segment operating margin ($424.56M operating income).
In addition to regulatory stickiness, Charles River maintains efficient scale and proprietary assets in its Research Models and Services segment, which produced $846.08M in FY2025 revenue. Operating specialized, pathogen-free barrier facilities requires extensive capital commitments, rigorous biosafety certifications, and deep colonies of standardized rodent and non-human primate strains. These assets act as a defensive barrier against traditional clinical diagnostic laboratories such as DGX and LH, which do not operate comparable research animal breeding infrastructure.
Despite these structural advantages, the moat is classified as Narrow with a 10-year fade horizon rather than Wide due to capital allocation headwinds in contract manufacturing. In FY2025, the Manufacturing Support division generated an operating loss of -$184.28M, depressing consolidated operating margin to 0.63% and causing FY2025 returns on invested capital of 5.79% to fall below the company's 11.05% WACC. While the core toxicology franchise retains formidable pricing resilience, exposure to volatile cell and gene therapy CDMO assets and client study postponement risks prevent assignment of a wider economic moat, as any operational turnaround remains a conditional underwriting assumption rather than a guaranteed recovery.
Zysk ekonomiczny
Charles River achieved return on invested capital of 5.79% in FY2025, which temporarily lagged its computed WACC of 11.05% primarily due to non-cash goodwill impairments and operating losses of -$184.28M in Manufacturing Support. However, the core Discovery and Safety Assessment segment generated $424.56M in operating income at a 17.67% operating margin, generating solid economic profits above the cost of capital on its dedicated asset base.1,6
6.5/ 10
Narrow
Sources of advantage
01High Regulatory Switching Costs — Preclinical toxicology and safety assessment protocols are embedded directly into regulatory filings with global authorities. Core Discovery and Safety Assessment generated $2,402.89M in FY2025 revenue and $424.56M in segment operating income, as sponsors face severe timeline delays and validation risks if switching CRO partners mid-protocol.Wide
02Proprietary Research Models and Barrier Facility Network — Research Models and Services generated $846.08M in FY2025 revenue and $44.57M in operating profit. CRL's biosecure animal breeding facilities and genetically defined strains represent an essential input for biomedical research that cannot be easily replicated by clinical peers like DGX.
Znane zagrożenia dla przewagi
Zagrożenie
Powaga
Oś czasu
Złagodzenie
Alternative In Vitro and In Silico Testing Technologies
medium
5-10 years
CRL is actively investing in and integrating digital pathology, computational toxicology, and cell-based assays into its discovery workflows.
Competition from Offshore Lower-Cost Preclinical CROs
The highlighted cell is Fair value when every assumption sits at its base level ($131.31). Each row and column shows what Fair value becomes when one assumption moves.
Free cash flow to the firm stays positive in the first projected year at $346.3M after modeled reinvestment of $0, with terminal value at 34.5% of enterprise value. A sudden drop in free cash flow is not projected unless capital spending relative to revenue, reinvestment, or gross margin resets materially.
Under the base scenario, which carries a probability of 45.0%, biopharmaceutical preclinical study demand stabilizes following near-term budget austerity, and operational restructuring in Manufacturing Support eliminates segment operating losses. Normalized consolidated operating margins expand steadily toward peer benchmarks, driving the equity valuation to $367.67, representing an expected return of 32.2% relative to $278.06. This path is disconfirmed if early-stage biotechnology study cancellations accelerate or if fixed facility costs prevent margin expansion over the next several fiscal quarters.
Robust resurgence in global biotechnology venture capital funding and public capital market access
Rapid re-acceleration in IND-enabling safety assessment study starts across North America and Europe
Manufacturing Support completes operational turnaround and achieves positive operating profit contribution
§7 Drzewo decyzyjne wynikówEN
Powyżej
Upgrade to Hold; Re-examine margin normalization trajectory and evaluate whether operating cash flow expansion enables accelerated balance sheet de-leveraging before adjusting positioning.
Wyzwalacz: Discovery and Safety Assessment revenue acceleration and Manufacturing Support operating profitability turnaround
An earnings beat driven by accelerating Discovery and Safety Assessment study volume and positive operational contribution in Manufacturing Support would validate normalized margin expansion toward peer levels and reduce near-term balance sheet refinancing pressure.
Zgodnie
Maintain Sell; Maintain disciplined capital preservation and continue avoiding equity accumulation given the substantial negative gap between share price $278.06 and Fair value $131.31.
Wyzwalacz: Preclinical study volume trends and operating margins tracking consensus expectations
Results matching consensus expectations confirm modest top-line contraction in preclinical services alongside prolonged operating losses in Manufacturing Support, keeping valuation constrained near Fair value $131.31 well below $278.06.
Poniżej
Exit the position; Immediately liquidate remaining exposure to avoid severe capital impairment as earnings power collapses toward stressed asset value.
Wyzwalacz: Accelerating preclinical study cancellations and deteriorating segment operating margins
An earnings miss driven by accelerating cancellations in Discovery and Safety Assessment and widening losses in Manufacturing Support would severely compress operating cash flow, elevating refinancing risks on balance sheet debt.
Jakość wyników
Earnings quality is characterized by strong underlying cash generation that diverges from GAAP accounting volatility. While reported net income is burdened by non-cash goodwill impairments and restructuring charges in Manufacturing Support, operating cash flow conversion remains healthy due to substantial non-cash depreciation and amortization add-backs. Working capital requirements remain disciplined with stable receivables collection and inventory management across preclinical testing sites. However, margin durability remains split between the high-margin, highly cash-generative Discovery and Safety Assessment core and ongoing drag from unabsorbed fixed overhead in contract manufacturing.
BieżącySubdued study volumes reflecting cautious biopharma venture capital deployment
Dlaczego to ważne
Discovery and Safety Assessment constitutes the majority of consolidated revenue and operating profit; revenue acceleration confirms pipeline recovery while further contraction forces fixed-cost de-leveraging.
Charles River demonstrated strong cash conversion in FY2025 despite GAAP net loss of -$144.34M. Operating cash flow remained robust at $737.65M, supported by non-cash depreciation of $403.31M and stock-based compensation of $71.08M. Free cash flow reached $518.49M, providing vital liquidity to service the company's $3,065.51M total debt load without external equity dilution, while the 19.48% pre-tax cost of debt serves as a modeled synthetic rate rather than contractual cash coupon costs.1,2,4,5
Alokacja kapitału
Capital allocation in FY2025 prioritized organic reinvestment and debt service, with disciplined at $219.15M (5.46% of ) compared to depreciation of $403.31M. Share repurchases totaled $360.67M while issuance was -$121.78M, reducing diluted to 49.56M in FY2025. Given total debt of $3,065.51M and cash of $213.77M, management must redirect discretionary exclusively toward debt reduction rather than buybacks.
The decline in FY2025 ROIC was driven by goodwill write-downs and -$184.28M in Manufacturing Support operating losses. While the underlying core Discovery and Safety Assessment segment generated $424.56M in FY2025 operating income, any rebound in asset productivity and economic value creation remains a conditional underwriting assumption subject to the resolution of CDMO headwinds.
Return on invested capital of 5.79% in FY2025 sits below the computed WACC of 11.05%, reflecting an observed negative economic spread of 5.26 percentage points in FY2025 driven by CDMO losses.
Discovery and Safety Assessment generated $424.56M in operating income at a 17.67% margin in FY2025, while Manufacturing Support lost -$184.28M, driving consolidated operating income down to $25.16M.
Under baseline underwriting assumptions, consolidated margin recovery is conditionally contingent on curtailing CDMO headwinds rather than restructuring the core preclinical franchise.
Most przepływów pieniężnychJak przepływy operacyjne przełożyły się na wolne przepływy pieniężne w FY2024.
StockMarketAgent.AI
Uzgodnienie przepływów operacyjnych
Zysk netto22,2 mln USDAmortyzacja+361,7 mln USDWynagrodzenie w akcjach+69,9 mln USDPozostałe korekty operacyjne+280,7 mln USDOperacyjne przepływy pieniężne734,6 mln USD
Uzgodnienie środków na początek i koniec
Środki pieniężne na początek284,5 mln USDOperacyjne przepływy pieniężne+734,6 mln USDPrzepływy inwestycyjne−245,1 mln USDPrzepływy finansowe−550,9 mln USDWpływ kursów walutowych−17,5 mln USDŚrodki pieniężne na koniec205,6 mln USD
734,6 mln USD − 233 mln USDWolne przepływy pieniężne 501,6 mln USD
Dane mostu przepływów pieniężnych
Zysk netto
22 203 000 USD
Wpływy operacyjne
734 577 000 USD
Amortyzacja
361 741 000 USD
Wynagrodzenie w akcjach
69 891 000 USD
Pozostałe korekty operacyjne
280 742 000 USD
Operacyjne przepływy pieniężne
734 577 000 USD
Dostępne środki pieniężne
1 019 057 000 USD
Środki pieniężne na początek
284 480 000 USD
Wydatki inwestycyjne
245 086 000 USD
Capex
232 967 000 USD
Pozostała działalność inwestycyjna
12 119 000 USD
Wydatki finansowe
550 927 000 USD
Skup akcji
119 175 000 USD
Spłata długu netto
412 188 000 USD
Pozostała działalność finansowa
19 564 000 USD
Wpływ kursów walutowych
17 474 000 USD
Środki pieniężne na koniec
205 570 000 USD
Przepływy inwestycyjne
-245 086 000 USD
Przepływy finansowe
-550 927 000 USD
Przychody według segmentu operacyjnegoUdział w łącznych przychodach za 2025-12-27.
4 mld USDŁączne przychody
Przychody według segmentu operacyjnegoUdział
Discovery And Safety Assessment2,4 mld USD59,8%−2% r/r
Research Models And Services846,1 mln USD21,1%+2% r/r
Manufacturing Support766,4 mln USD19,1%−0,4% r/r
Źródło: SEC EDGAR · Złożono 2026-02-18 · SEC EDGAR
Dane o strukturze przychodów: Przychody według segmentu operacyjnego
Przychody według segmentu operacyjnego
Przychody
Udział
r/r
Discovery And Safety Assessment
2,4 mld USD
59,8%
-2%
Research Models And Services
846,1 mln USD
21,1%
2%
Manufacturing Support
766,4 mln USD
19,1%
-0,4%
Przychody według regionuUdział w łącznych przychodach za 2025-12-27.
4 mld USDŁączne przychody
Przychody według regionuUdział
United States2,1 mld USD53,3%−4,4% r/r
Europe1,1 mld USD27,5%+2,3% r/r
Canada501 mln USD12,5%+3,9% r/r
Asia Pacific205 mln USD5,1%+4,1% r/r
Pozostałe64,9 mln USD1,6%+22,8% r/r
Źródło: SEC EDGAR · Złożono 2026-02-18 · SEC EDGAR
Dane o strukturze przychodów: Przychody według regionu
Przychody według regionu
Przychody
Udział
r/r
United States
2,1 mld USD
53,3%
-4,4%
Europe
1,1 mld USD
27,5%
2,3%
Canada
501 mln USD
12,5%
3,9%
Asia Pacific
205 mln USD
5,1%
4,1%
Other
64,9 mln USD
1,6%
22,8%
Przychody i wynikiJak skala działalności przekłada się na raportowany zysk.
Gotówka i zadłużenieDostępna płynność wobec całkowitego zadłużenia.
Generowanie gotówkiPrzepływy operacyjne w porównaniu z wolnymi przepływami pieniężnymi.
RentownośćZmiany marży brutto, operacyjnej i netto.
Dane finansowe na określony moment użyte w analizie z 2026-09-20.
Dane historii finansowej
Okres
Przychody
EBITDA
Zysk netto
Operacyjne przepływy pieniężne
Wolne przepływy pieniężne
Capex
Amortyzacja
Wynagrodzenie w akcjach
Skup akcji
Wypłacone dywidendy
Emisja długu netto
Przepływy inwestycyjne
Przepływy finansowe
Środki pieniężne na początek
Środki pieniężne na koniec
Gotówka i inwestycje
Zadłużenie ogółem
Marża operacyjna
ROIC
WACC
Spread ROIC−WACC
2016-12-31
1,7 mld USD
377,3 mln USD
154,8 mln USD
316,9 mln USD
261,6 mln USD
55,3 mln USD
126,7 mln USD
43,6 mln USD
12,3 mln USD
0 USD
—
-692,7 mln USD
380,8 mln USD
—
119,9 mln USD
121,4 mln USD
1,2 mld USD
14,1%
—
5,5%
—
2017-12-30
1,9 mld USD
457,9 mln USD
123,4 mln USD
318,1 mln USD
235,6 mln USD
82,4 mln USD
131,2 mln USD
44 mln USD
106,9 mln USD
0 USD
—
-72,6 mln USD
-208,5 mln USD
119,9 mln USD
166,3 mln USD
192,3 mln USD
1,1 mld USD
15,5%
—
5,2%
—
2018-12-29
2,3 mld USD
507,2 mln USD
226,4 mln USD
441,1 mln USD
301,1 mln USD
140,1 mln USD
161,8 mln USD
47,3 mln USD
13,8 mln USD
—
—
-955 mln USD
558,1 mln USD
166,3 mln USD
197,3 mln USD
196,3 mln USD
1,6 mld USD
14,6%
—
5,9%
—
2019-12-28
2,6 mld USD
563,1 mln USD
252 mln USD
480,9 mln USD
340,4 mln USD
140,5 mln USD
198,1 mln USD
57,3 mln USD
18,1 mln USD
34,5 mln USD
—
-681,5 mln USD
231,9 mln USD
197,3 mln USD
240 mln USD
239 mln USD
2 mld USD
13,4%
—
5,7%
—
2020-12-26
2,9 mld USD
768,5 mln USD
364,3 mln USD
546,6 mln USD
380 mln USD
166,6 mln USD
234,9 mln USD
56,3 mln USD
24 mln USD
46,6 mln USD
—
-601,5 mln USD
47,2 mln USD
240 mln USD
233,1 mln USD
229,4 mln USD
2,2 mld USD
14,8%
—
5,0%
—
2021-12-25
3,5 mld USD
820,2 mln USD
391 mln USD
760,8 mln USD
532 mln USD
228,8 mln USD
265,5 mln USD
71,5 mln USD
40,7 mln USD
45,7 mln USD
—
-1,4 mld USD
672,6 mln USD
233,1 mln USD
246,3 mln USD
242,3 mln USD
3,2 mld USD
16,7%
—
5,5%
—
2022-12-31
4 mld USD
986,1 mln USD
486,2 mln USD
619,6 mln USD
294,9 mln USD
324,7 mln USD
303,9 mln USD
73,6 mln USD
38,7 mln USD
—
19,8 mln USD
-607,9 mln USD
-42,4 mln USD
246,3 mln USD
241,2 mln USD
234,9 mln USD
3,1 mld USD
16,4%
—
7,7%
—
2023-12-30
4,1 mld USD
1 mld USD
474,6 mln USD
683,9 mln USD
365,4 mln USD
318,5 mln USD
314,1 mln USD
72 mln USD
24,2 mln USD
25,6 mln USD
-75,3 mln USD
-563,2 mln USD
-85,5 mln USD
241,2 mln USD
284,5 mln USD
276,8 mln USD
3,1 mld USD
14,9%
—
8,0%
—
2024-12-28
4 mld USD
581,1 mln USD
22,2 mln USD
734,6 mln USD
501,6 mln USD
233 mln USD
361,7 mln USD
69,9 mln USD
119,2 mln USD
—
-412,2 mln USD
-245,1 mln USD
-550,9 mln USD
284,5 mln USD
205,6 mln USD
194,7 mln USD
2,7 mld USD
5,6%
—
8,0%
—
2025-12-27
4 mld USD
410,8 mln USD
-144,3 mln USD
737,6 mln USD
518,5 mln USD
219,2 mln USD
403,3 mln USD
71,1 mln USD
360,7 mln USD
—
-121,8 mln USD
-209,3 mln USD
-536,7 mln USD
205,6 mln USD
216 mln USD
213,8 mln USD
3,1 mld USD
0,6%
—
9,6%
—
§9 Porównanie wyceny z konkurentami
Wartość godziwaReport-date price
Charles River Laboratories International Inc.CRL
Cena / wartość godziwa
Wartość godziwa131,31 USDReport-date price278,06 USD
Data oceny
Przewaga konkurencyjnaNarrow
Karta wyników inwestycyjnych40 / 100
Labcorp Holdings Inc.LH
Cena / wartość godziwa
Wartość godziwa263,85 USDReport-date price311,71 USD
Data oceny
Przewaga konkurencyjnaNarrow
Karta wyników inwestycyjnych63 / 100
Quest Diagnostics IncorporatedDGX
Cena / wartość godziwa
Wartość godziwa226,02 USDReport-date price190,18 USD
Data oceny
Przewaga konkurencyjnaNarrow
Karta wyników inwestycyjnych64 / 100
Charles River Laboratories International Inc.CRL
Cena / wartość godziwa
Wartość godziwa131,31 USDReport-date price278,06 USD
Charles River Laboratories International Inc. (CRL) trades at 22.5x forward earnings against a peer median of 20.4x. Its EV/EBITDA of 19.0x compares with a peer median of 14.7x. The comparison uses 4 peers: Revvity Inc., Labcorp Holdings Inc., Quest Diagnostics Incorporated and Natera Inc., as of 2026-09-19.
§10 Branża i cyklEN
Faza cyklu
Contraction
The healthcare products industry exhibits a capex-to-revenue benchmark of 4.5% and capex-to-depreciation of 0.80x. Charles River's FY2025 capital expenditures were $219.15M on $4,015.38M revenue (capex intensity 5.46%), with depreciation of $403.31M yielding capex/depreciation of 0.54x, reflecting capital discipline and disciplined facility maintenance.5
Cykl byczy
In an expansionary biotech funding environment, venture capital and public equity markets provide abundant capital to early-stage biopharma, driving an acceleration in candidate nominations and IND-enabling toxicology studies. This boosts Discovery and Safety Assessment volumes and pricing power, lifting operating margins toward peer levels above 15.5%.
Cykl niedźwiedzi
During cyclical funding pauses and rising interest rates, early-stage biotechnology sponsors prioritize cash conservation and defer preclinical research, creating volume declines in discovery studies. In FY2025, consolidated operating margin fell to 0.63%, and FY2026 consensus projects a revenue contraction of -2.6%.
Trendy długoterminowe
Trend
Wpływ
Uwaga
Regulatory Complexity and Standards in Toxicology
positive
Stringent regulatory standards enforced by the FDA and global regulators for safety pharmacology and biologics toxicity require specialized GLP-compliant testing infrastructure, where CRL's validated facilities support its competitive positioning under baseline underwriting assumptions.
Outsourcing of Biopharmaceutical R&D
positive
Global pharmaceutical firms increasingly shutter internal vivariums and preclinical laboratories in favor of variable-cost outsourcing to scaled CROs with multi-site international capabilities.
Pozycjonowanie
Charles River occupies the leading market position in early-stage preclinical safety assessment and proprietary animal research models, generating $2,402.89M in DSA revenue and $846.08M in RMS revenue in FY2025. Unlike clinical diagnostic peers DGX and LH that cater to routine healthcare testing, CRL is heavily exposed to upstream biopharmaceutical R&D expenditure cycles.3,6
§11 Zarządzanie pozycjąEN
Wielkość pozycji
0%
With the shares trading at $278.06, representing an 111.8% premium to our Fair value midpoint of $131.31, Charles River Laboratories offers a highly unfavorable risk-reward profile. The presence of $3,065.51M in total debt alongside near-term consensus revenue contraction of -2.6% for FY2026 mandates zero capital allocation and a full Sell recommendation.2
Ryzyko
Disciplined risk management favors capital preservation and avoiding averaging down into an overextended stock. Charles River faces an asymmetric downside skew due to its $3,065.51M total debt load, elevated capital costs modeled under a 19.48% synthetic pre-tax cost of debt valuation assumption, and vulnerability to cyclical biotech R&D cutbacks, suggesting capital is more prudently allocated to opportunities offering a genuine margin of safety.
Transze wejścia
Poziom
Działanie
Dlaczego
Above $200.00
Do not allocate new capital; liquidate existing long positions
With shares trading at $278.06, representing an 111.8% premium to our Fair value midpoint of $131.31, the stock offers no fundamental margin of safety and significant downside risk.2
Growth Investors
Avoid
Biopharmaceutical venture capital caution and pipeline reprioritization drive consensus FY2026 revenue contraction of -2.6%, removing top-line momentum in the near term.
Institutional Quality Compounders
Avoid
Substantial balance sheet debt of $3,065.51M under a 19.48% pre-tax cost of debt alongside -$184.28M in Manufacturing Support losses impairs capital efficiency below the cost of capital.1,2,6
§14 Końcowa rekomendacjaEN
Działanie
Sprzedaj
We recommend a complete Sell rating on Charles River Laboratories International Inc. Shares at $278.06 trade 111.8% above our fundamental Fair value midpoint of $131.31, creating a severely negative risk-reward skew for equity holders.2
Although the company's core Discovery and Safety Assessment franchise retains an entrenched competitive position ($2,402.89M revenue), current valuations aggressively price in an immediate margin normalization that overlooks ongoing contract manufacturing losses (-$184.28M in FY2025), near-term revenue contraction (-2.6% consensus in FY2026), and elevated debt service obligations on $3,065.51M total debt.
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Sources
The records this analysis drew on, as they stood when it was run.
Not every cited input appears here: internal calculations and intermediate model outputs have no external record, and some citations could not be matched to one.
Structural Margin Compression from CDMO Losses and Fixed Costs
Consolidated operating margin fell to 0.63% in FY2025 ($25.16M operating income on $4,015.38M revenue,) due to -$184.28M in Manufacturing Support operating losses. If consolidated operating margin remains below 6.0% rather than rebounding to modeled levels of 10.71% to 14.81%, normalized earnings power collapses.5,6
FV impact
0%
Operating margin 6 points lower throughout
Trigger
Within 24 months
Refinancing Distress and Capital Cost Expansion
CRL carries $3,065.51M in total debt against cash of $213.77M. Computed WACC is 11.05% with pre-tax cost of debt at 19.48%. A credit spread widening that raises WACC above 13.0% reduces DCF equity value toward zero.1,2,5
The valuation assumes a 16.5x terminal P/E multiple anchored to clinical testing peer LH at 16.17x. If early-stage biotech volatility prompts market derating to 13.0x forward P/E, forward earnings fair value decreases significantly.
FV impact
-20%
Terminal multiple 20% lower
Trigger
Within 12 months
Failure of Manufacturing Support turnaround and structural fixed-cost absorption deficit preventing margin recovery toward peer benchmark of 15.5%.
Refinancing friction and credit spread widening on $3,065.51M total debt, where capital costs reflect a synthetic pre-tax cost of debt valuation assumption of 19.48% rather than observed contractual debt servicing yields.
03Global Scale and Regulatory Footprint — International revenue across Europe ($1,102.70M), Canada ($501.03M), and Asia-Pacific ($205.02M) provides multi-jurisdictional compliance capabilities that small specialized competitors cannot match.Moderate
2-4 years
Global regulatory agencies require rigorous GLP adherence and audited audit trails; CRL's accredited Western facility network in North America and Europe ($1,102.70M) provides superior compliance assurance.6
Valuation multiple expands toward high-growth life sciences tools and testing peer levels
In the bull scenario, assigned a probability of 25.0%, a decisive recovery in global biopharma venture funding spurs candidate progression into IND-enabling toxicology studies. Discovery and Safety Assessment study volume re-accelerates sharply, allowing substantial fixed-cost operating leverage to drive consolidated margins above peer benchmarks. Combined with a successful turnaround in Manufacturing Support and rapid debt repayment, equity value reaches Potential value of $459.24, delivering a return of 65.2% from $278.06. Investors would confirm this trajectory through sequential quarterly revenue growth re-acceleration and expanding backlog over the next year.
BieżącyPersistent operating losses driven by cell and gene therapy client delays and facility underutilization
Dlaczego to ważne
Restoring breakeven or positive operating contribution in manufacturing support eliminates a massive consolidated margin drag and accelerates overall operating margin normalization.
BieżącyHealthy organic cash conversion supporting routine debt service
Dlaczego to ważne
Given substantial balance sheet debt, sustained free cash flow is vital to pay down obligations and lower annual interest burdens without dilutive equity financing.
05
Wskaźnik:
International Revenue Durability Across Europe and Asia
BieżącyStable international study placement buffering domestic biotech softness
Net debt of $2,851.74M ($3,065.51M total debt less $213.77M cash) combines with a calculated synthetic pre-tax cost of debt of 19.48% to push computed WACC to 11.05%.
Elevated leverage restricts capital allocation optionality and depresses DCF equity value until de-leveraging milestones are achieved.
Natera, Inc.NTRA
Cena / wartość godziwa
Wartość godziwa75,94 USDReport-date price410,35 USD
Data oceny
Przewaga konkurencyjnaNarrow
Karta wyników inwestycyjnych51 / 100
Marża
CRL
Charles River Laboratories International Inc.
$13.4B
22.5x
3.3x
19.0x
-7.5%
—
RVTY
Revvity Inc.
$16.0B
24.3x
5.5x
20.9x
3.2%
17.1%
LH
Labcorp Holdings Inc.
$26.0B
16.2x
1.8x
14.1x
11.7%
12.2%
DGX
Quest Diagnostics Incorporated
$27.2B
20.4x
2.4x
14.7x
14.6%
15.2%
NTRA
Natera Inc.
$53.2B
19.7x
-12.5%
-10.3%
Prolonged Higher Capital Costs in Early-Stage Biotech
negative
Higher risk-free benchmark rates constrain private biotech venture funding, extending the duration of early-stage pipeline reprioritizations and curbing study starts.
At or below Fair value of $131.31
Re-evaluate only upon verified operational turnaround and deleveraging
Re-underwrite intrinsic value only if the shares de-rate to Fair value and Manufacturing Support eliminates operating losses (-$184.28M in FY2025).
Continued quarterly operating losses exceeding -$25.0M
Reduce normalized earnings power projections and reject any early entry thesis.
Total Debt Deleveraging Progress
Total debt remaining above $3,000.0M through FY2026
Factor elevated ongoing debt service and capital costs into multi-stage valuation.