By Puyaan Singh
Feb 18 (Reuters) – Contract drug developer Charles River Laboratories on Wednesday forecast annual profit above Wall Street estimates, betting on an improvement in demand for its drug discovery and development services from biotech clients.
The company, however, warned that its first-quarter profit will decline in the “high-teens”, citing a 40-cent hit related to the timing of non-human primates shipments and stock compensation for CEO James Foster who retires in May.
TD Cowen analyst Charles Rhyee said the implied range for first-quarter adjusted profit is $1.90 to $1.97 per share. Analysts’ average expectation is $2.55 per share, per LSEG-compiled data.
Charles River shares were down 4%, extending the 22.8% slide this year over concerns recent artificial intelligence advances could displace the company’s services.
Foster downplayed these concerns.
“Frankly surprised at the violent share price reaction to the AI conversations been going on across multiple industries,” he said during a post-earnings call, adding, “we’re participating in (AI)… don’t see it as a threat to the company.”
Peer IQVIA, also under AI-related pressure, defended its strategy earlier this month, after a six‑day rout wiped out about $830 billion in market value of software and services stocks.
Charles River expects adjusted per share profit for 2026 in the range of $10.70 to $11.20, compared to analysts’ average estimate of $10.88.
It is seeing more proposals and fewer cancellations from drugmakers, after U.S. government drug price negotiations weighed on activity. Biotechs are also seeing an uptick in funding since 2025, following a post-pandemic crunch.
“Net bookings in the fourth quarter… demonstrates the stabilization of the biopharmaceutical demand environment,” said Foster, adding, “we are cautiously optimistic that positive demand trends will continue in 2026.”
The company expects the roughly $510 million acquisition of Cambodia-based NHP-supplier K.F. to add 25 cents to per share profit this year and around 60 cents in 2027 as the company secures its supply chain.
Charles River posted quarterly adjusted profit per share of $2.39, topping estimates of $2.34.
(Reporting by Puyaan Singh in Bengaluru; Editing by Shailesh Kuber)
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