Charles River Drops on Near-Term Headwinds From Primate Investigation; FVE $260, Shares Undervalued

Charles River reported strong fourth-quarter results highlighted by revenue of $1.1 billion and full-year revenue of nearly $4 billion, representing a 12% increase compared with 2021’s revenue. The company continues to benefit from strong booking demand and a robust backlog. During the earnings call, management announced that it received a subpoena from the U.S. Department of Justice, or DOJ, on Feb. 17 related to an investigation into the Cambodian nonhuman primate, or NHP, supply chain. In mid-November 2022, the DOJ charged two Cambodian officials and six coconspirators with felonies related to an NHP smuggling scheme in which wild-caught macaques were laundered through Cambodian entities for export to the United States and elsewhere and were falsely labeled as captive bred, which violates the Endangered Species Act and the Lacey Act. Charles River Laboratories was not named in the DOJ charges in November, and it was subpoenaed to provide information related to the case.