UPDATE: ISI Group Reiterates Neutral Rating, Raises PT on Charles River Laboratories on In-Line 4Q12
In a report published Wednesday, ISI Group reiterated its Neutral rating on Charles River Laboratories (NYSE: CRL), and raised its price target from $40.50 to $43.00.
ISI Group noted, “Charles River posted in-line 4Q'12, with top-line results skewed by a tough comp (recall 4Q'11 had an extra week that contributed 4%), and a bottom-line beat aided by a lower tax rate (discreet tax benefits and higher than expected R&D tax credit in Canada). Pre-clinical services (PCS) segment was the outperformer, up LSD excluding the extra week. Management yet again noted that they continued to see isolated instances of spot price increases, and improving capacity utilization. In RMS, EMD was the standout (>20% growth incl. Accugenix) with the expectation of double-digit growth in the medium term driven by new MCS product launches (Nexus). Models declined mid-single-digits with EU and Asia beginning to show weakness, and Services were down slightly on tough comps. While we are encouraged by signs of green shoots in the PCS segment, tempered outlook in RMS and strategic deal start-up costs (offsetting cost actions) limit earnings power in the medium-term. Given this and current valuation levels, we reiterate our Neutral rating on CRL and are tweaking our PT from $40.50 to $43.00 (14x FY14 EPS; 8x FY14 EBITDA).”
Charles River Laboratories closed on Tuesday at $41.69.
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Tags: ISI Group