Market Overview

Pharma Supplier Charles River Laboratories Has Leading Competitive Position, Raymond James Says In Upgrade

Pharma Supplier Charles River Laboratories Has Leading Competitive Position, Raymond James Says In Upgrade

Charles River Laboratories Intl. Inc (NYSE: CRL), a provider of products and services to pharmaceutical companies, is a market share leader that's well-positioned for expansion, according to Raymond James.

The Analyst

Analyst Michael Baker upgraded Charles River Laboratories from Market Perform to Outperform with a new $140 price target.

The Thesis

Charles River has a leading competitive position, with a product line unrivaled by peers, Baker said in the upgrade note. (See his track record here.) 

This puts the company in a position of pricing power at a time when its products and services are becoming increasingly vital as part of the drug development process, the analyst said.

Charles River diversified its business away from more mature markets toward higher-growth segments with larger addressable markets, Baker said. The company operates in a mostly fragmented market, which implies that potential exists for more "robust" M&A opportunities, he said.

Future accretive M& deals that add new capabilities and market share opportunities for Charles River should be sufficient to lift the stock price, the analyst said. 

The stock is trading at 19 times Raymond James' 2019 EPS estimate, which is near the midpoint of its two-year historical forward P/E range of 15 to 22 times.

The analyst's $140 price target implies a 22 times multiple, which Baker said is justified by a strong biotech funding backdrop, future market share gains and an attractive potential M&A pipeline.

Price Action

Charles River shares were rising 2.36 percent to $123.41 at the time of publication Thursday.

Related Links:

Charles River Laboratories Is A Leader In Biopharma Outsourcing, KeyBanc Says In Upgrade

Jefferies Highlights A Pair Trade In Pharma: Buy ICON, Hold Tight On INC Research

Latest Ratings for CRL

Mar 2019MaintainsEqual-WeightEqual-Weight
Mar 2019MaintainsOverweightOverweight
Dec 2018MaintainsEqual-WeightEqual-Weight

View More Analyst Ratings for CRL
View the Latest Analyst Ratings

Posted-In: Michael BakerAnalyst Color Biotech Upgrades Health Care Price Target Analyst Ratings General Best of Benzinga


Related Articles (CRL)

View Comments and Join the Discussion!

Look Into The Future Of Your Business With Predictive Analytics

Bullish KeyBanc Sees Opportunity For Tempur Sealy In A Mattress Firm Bankruptcy