CFRA Downgrades Charles River Labs to Hold with $165 Price Target

CFRA has downgraded Charles River Labs (CRL) to a Hold with a price target of $165.00. The company's shares closed at $158.04. Analyst consensus is Moderate Buy with a price target consensus of $156.73. CRL market cap is $7.83B and has a P/E ratio of -245.23. Insider sentiment is negative with 59 insiders selling their shares over the past quarter.

The U.S. Food and Drug Administration's (FDA) recent announcement to reduce reliance on animal testing for drug development has sparked significant market reactions, particularly among companies like Inotiv (NASDAQ:NOTV) and Charles River Laboratories (NYSE:CRL). Shares of Inotiv and Charles River Laboratories plummeted 49.5% and 28.1% respectively, reflecting investors' concerns about the long-term demand for animal testing services.

The FDA's initiative, which aims to replace animal testing with more effective, human-relevant methods, is expected to accelerate drug development, improve safety, and lower costs. The agency will begin to encourage the inclusion of New Approach Methodologies (NAMs) data in investigational new drug applications, utilizing AI-based computational models and organoid toxicity testing. This shift marks a significant paradigm in drug evaluation, promising to expedite cures and treatments for Americans while reducing animal use [1].

Analysts have reacted to this shift with varying sentiments. CFRA has downgraded Charles River Labs (CRL) to a Hold with a price target of $165.00. The company's shares closed at $158.04, reflecting a 28.1% decline in today's trading session. While insider sentiment remains negative with 59 insiders selling their shares over the past quarter, the market consensus is a Moderate Buy with a price target consensus of $156.73. CRL's market cap stands at $7.83B and has a P/E ratio of -245.23 [2].

The FDA's move is anticipated to streamline the drug development process, allowing therapies to reach patients quicker without compromising safety. This regulatory change aligns with the FDA's commitment to modernize regulatory science as technology advances. Companies like Inotiv and Charles River Laboratories, which have traditionally provided animal testing services, may see a reduction in demand for their services, impacting their business models.

The market's reaction reflects the potential impact of the FDA's new direction on companies relying on animal testing. As the regulatory landscape shifts, investors are reassessing the long-term demand for these services, leading to significant price movements in affected stocks.

References:
[1] https://uk.investing.com/news/stock-market-news/inotiv-and-charles-river-stock-tumble-as-fda-moves-away-from-animal-testing-93CH-4026344
[2] CFRA Research Report on Charles River Laboratories (CRL)