Charles River Reports Strong Outlook for 2022; Raising FVE to $260, Yet Shares Remain Expensive

Charles River reported solid fourth-quarter revenue of $905 million and ended the year with total revenue of $3.5 billion, representing a 21% increase from 2020. We’ve updated our model with the latest results, and we raised our fair value estimate to $260 per share from $244, reflecting stronger than expected revenue growth in the discovery & safety assessment segment combined with the impact of the time value of money. While we believe Charles River is well positioned to post strong sales growth over the next five years with over 11.5% CAGR, the stock’s high valuation seems to expect even stronger potential. Despite our view on valuation, the company’s robust competitive position in the industry continues to support a narrow moat rating.