Charles River Laboratories International, Inc. (CRL): A Bull Case Theory
We came across a bullish thesis on Charles River Laboratories International, Inc. (CRL) on scuttleblurb's Substack. In this article, we will summarize the bulls' thesis on CRL. Charles River Laboratories International, Inc. (CRL)'s share was trading at $136.25 as of 28th May. CRL's trailing and forward P/E were 25.07 and 14.41 respectively according to Yahoo Finance.
A technician in a lab inspecting an ELISA test kit for use in biopharmaceutical diagnostics.
Life sciences companies produce tangible tools like assays, bioreactors, and chromatography columns used across three key drug development phases: preclinical, clinical, and manufacturing. The preclinical phase, often split into discovery and regulatory safety testing, involves identifying and optimizing drug candidates through high-throughput screening and ADME-Tox tests, assessing absorption, distribution, metabolism, excretion, and toxicity. Charles River plays a significant role here by supplying cells and animals for testing, running screenings, and conducting ADME evaluations, although early discovery is mostly handled in-house due to its exploratory nature.
As drug candidates progress, testing becomes more regulated, and outsourcing rises, particularly for Safety Assessment, which focuses on toxicity testing using larger mammals under strict Good Laboratory Practices (GLP). Charles River excels at these structured studies, which form about 60% of tox testing and require rigorous documentation and quality assurance. After successful safety testing, drugs enter clinical trials where clinical CROs lead, but Charles River remains involved through its Microbial Solutions and Biologics Testing divisions, ensuring drugs are free from microbial contamination and validating biologics' purity, potency, and safety.
Despite initial attempts to enter drug manufacturing (CDMO) through acquisitions, Charles River exited a crowded small molecule space but reentered more strategically with acquisitions in cell and gene therapy manufacturing, aligning better with its biologics testing expertise. This focused approach positions Charles River as a critical and growing player in supporting biopharma through complex preclinical safety testing and manufacturing for cutting-edge therapies.
For a comprehensive analysis of another standout stock in the healthcare industry, be sure to check out our article on Danaher Corporation (DHR), wherein we summarized a bullish thesis by Best Anchor Stocks on Substack.
Charles River Laboratories International, Inc. (CRL) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 39 hedge fund portfolios held CRL at the end of the first quarter which was 45 in the previous quarter. While we acknowledge the risk and potential of CRL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CRL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article was originally published at Insider Monkey.
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