Charles River beats quarterly estimates on stable demand for drug development services

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(Reuters) – Charles River Laboratories on Wednesday beat fourth-quarter profit and revenue estimates, helped by stable demand for its drug discovery and development services from biotech clients.

Contract research firms such as Charles River have noted reduced spending from biotech clients in the past two years.

Recent interest rate cuts are likely to improve funding environment for biotech companies, as borrowing costs might ease.

However, some life sciences firms have indicated that despite the rate cuts, smaller biotech clients will be cautious with their investments.

Charles River CEO James Foster said small and mid-sized biotech clients benefited from a more favorable funding environment in 2024, compared with the previous two years.

The company expects these demand trends will be “stable to slightly improved” this year, he added.

The Massachusetts-based company reported a quarterly profit of $2.66 per share on an adjusted basis, compared with analysts’ average estimate of $2.53, according to data compiled by LSEG.

Charles River forecast 2025 adjusted profit in the range of $9.10 to $9.60 per share, the midpoint of which is below estimates of $9.57.

Annual profit will take a hit due to lower revenue, but it will be partially offset by cost-saving benefits associated with restructuring initiatives, the company said.

It expects 2025 reported revenue to decline by 7% to 4.5%. The company said the forecast assumes relatively stable biotech demand trends, compared with the second half of 2024.

Charles River posted fourth-quarter revenue of $1 billion, beating estimates of $983.6 million.

Revenue at its discovery and safety assessment segment fell 3.6% to $603.3 million, surpassing expectations of $578.1 million.

(Reporting by Sneha S K in Bengaluru; Editing by Shreya Biswas)