On Thursday, contract drug developer Charles River Laboratories (NYSE: CRL) cut its annual forecasts as it warned of worsening demand from drugmakers and a persistently low appetite for clinical trials from biotech companies.
Shares of the company crashed 16.2% to $191.84, putting them on track for their worst day in over four years.
Charles River and its peers have been grappling with soft demand for their services from biotech clients due to a funding crunch in the past year amid a high-interest-rate environment.
The company said demand from biotech clients is not expected to improve in the second half of the year, contrary to earlier predictions.
CEO James Foster added bookings and proposals from larger drugmakers declined, likely due to the U.S. Inflation Reduction Act’s provision for the government to negotiate drug prices, with the trend expected to continue into 2025.
The Massachusetts-based company is also set to implement restructuring initiatives, which is expected to realize $100 million this year. Foster said the company will align its capacity and staffing with the anticipated lower demand.
Charles River (NYSE: CRL) expects annual adjusted profit to be between $9.90 and $10.20 per share, compared with its prior expectations of $10.90 to $11.40 per share.
Analysts on average estimate profit for the period at $10.99 per share, according to LSEG data. The company expects full-year revenue to decrease by 2.5% to 4.5%, versus its previous forecast of an increase of 1% to 4%. Charles River’s revenue fell 3.1% to $1.03 billion for the second quarter but beat Wall Street estimates of $1.02 billion. On an adjusted basis, the company posted a profit of $2.80 versus estimates of $2.39.
(Source: Reuters)
Jennifer Tacker is a staff writer at ABBO News. She holds a B.A. from the University of Waterloo and a B.Ed from Western University. Jennifer has been active in the stock market and crypto sector for a decade. She specializes in technical analysis and trading strategies.
