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Key Takeaways
- Charles River Laboratories shares tumbled Wednesday after the company said it expects to post a decline in sales for the full fiscal year, instead of growth.
- Revenue for the second quarter met estimates, while profits came in slightly above estimates, but the company said demand would likely soften in the second half of the year.
- The board also approved a new $1 billion stock buyback plan.
Shares of Charles River Laboratories (CRL) tumbled over 12% in intraday trading Wednesday after the company said it expects to post a decline in sales for the full fiscal year, instead of growth.
The health care diagnostics and research company reported second-quarter revenue in line with analysts’ expectations at $1.03 billion, while profits came in just above estimates at $94.08 million. Both declined from a year ago, when the company reported revenue of $1.06 billion and net income of $97.02 million.
Expecting Softer Demand in the Second Half of 2024
CEO James Foster said that while performance in the first half of the year was roughly in line with internal projections, trends “suggest that demand will not improve during the second half of the year as we had previously anticipated, and in fact, will decline for global biopharmaceutical clients.”
The expectations of softer demand led Charles River to lower its guidance for the full fiscal year. The company said it now expects full-year revenue to fall 2.5% to 4.5%, compared to 1% to 4% growth previously. Earnings per share (EPS) projections were lowered to $5.65 to $5.95 from $7.60 to $8.10.
The company’s board also approved a new $1 billion stock buyback plan, replacing a previous $1.3 billion plan that had been axed with roughly $129 million remaining.
Charles River shares were down 12.2% to $200.98 as of 1 p.m. ET Wednesday following the news. With Wednesday’s slide, they’ve lost about 15% since the start of the year.