Analyst Note| Rachel Elfman |
Charles River reported stronger-than-expected second-quarter revenue of nearly $915 million, representing an increase of 34% from the prior-year period. GAAP net income was $88.4 million for the quarter, an increase of 31% from second-quarter 2020. Due to robust industry demand across Charles River’s segments, management has increased its guidance for 2021. We’ve raised our fair value estimate to $225 per share from $170 due to a stronger outlook for the year thanks to healthy client demand and a more positive impact from the acquisitions of Cognate BioServices and Vigene Biosciences. We maintain our narrow moat rating, which is based on the intangible assets and switching costs associated with Charles River’s leading research models and related services, including discovery and safety assessment.