(Reuters) – Charles River Laboratories trimmed its annual forecast on Thursday, as it no longer expects demand for its drug discovery and development services to improve in the second half of the year, sending its shares down 15% in premarket trading.
The contract research firm also said its board has approved a new stock repurchase plan of $1 billion, replacing a prior plan of $1.3 billion that had $129.1 million remaining on it when terminated.
Charles River and its peers have been grappling with weakening demand for their services due to a funding crunch throughout the previous year among their biotech clients amid a high-interest-rate environment.
James C. Foster, CEO of Charles River said “…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.”
Some analysts had previously predicted the funding for biotechs could stabilize this year after a strong 2023 for regulatory approvals in the U.S.
The Massachusetts-based company is also implementing restructuring initiatives from which $100 million will be realized this year.
Charles River expects its 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 also 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.
(Reporting by Puyaan Singh in Bengaluru; Editing by Vijay Kishore)
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