Charles River lifts profit forecast on improving biotech demand

Aug. 5 (Reuters) - Charles River Laboratories raised its annual profit forecast on Wednesday after the contract drug developer beat quarterly profit and revenue estimates on stronger demand for its drug discovery and development services from biotechs.

Shares of the company were up more than 8% at $252.95 in premarket trading.

Clinical research organizations have shown signs of improvement as biotech and pharmaceutical companies increase spending on research and manufacturing after a prolonged post-pandemic slowdown.

The Wilmington, Massachusetts-based company now expects its 2026 adjusted per-share profit to be between $11.15 and $11.45, up from its prior view of $10.80 to $11.30.

Charles River said the new forecast "reflects the expected operational outperformance for the year, including in the second quarter," primarily driven by improving demand trends in the discovery and safety assessment segment and better-than-expected performance in manufacturing.

Quarterly revenue in its drug discovery and safety assessment segment rose 0.2% on an organic basis to $606.5 million, helped by higher study volumes for regulated safety assessment services.

Charles River's second-quarter revenue came in at $1 billion, surpassing analysts' average estimate of $975.7 million, according to data compiled by LSEG.

"The acceleration of organic growth at a period of decline is a key highlight in the quarter," said Mizuho analyst Ann Hynes, adding that the company reported a solid second quarter.

On an adjusted basis, Charles River reported profit of $3.02 per share, beating Wall Street's estimate of $2.74.