12 Best Diagnostics Stocks to Invest In Right Now

11. Charles River Laboratories International, Inc. (NYSE:CRL)

Number of Hedge Fund Holders: 45

Charles River Laboratories International, Inc. (NYSE:CRL) offers essential services and products to biotechnology and pharmaceutical companies, academic institutions, and government agencies to support and augment their research, diagnostics, and drug development endeavors. It operates through the Research Models and Services (RMS), Discovery and Safety Assessment (DSA), and Manufacturing Solutions segments.

The company reported a 7.4% growth in its non-GAAP net income for fiscal Q4 2024, reaching $136.6 million. Diluted EPS on a non-GAAP basis was $2.66, an increase of 8.1%. These growth trends were attributed to higher operating income and favorable below-the-line items, including reductions in the tax rate, interest expense, and diluted shares outstanding.

Charles River Laboratories International, Inc. (NYSE:CRL) has launched several initiatives to safeguard operating margin and shareholder value, including restructuring initiatives expected to yield annualized savings of approximately $225 million in 2026. Of these, over $175 million will be realized in 2025. Upslope Capital Management was bullish on Charles River Laboratories International, Inc. (NYSE:CRL) in their Q4 2024 investor letter, reflecting that the company holds a leading market share position in a number of its businesses. It has worked on around 80% of all the drugs approved in the last five years, which further sheds light on its large-scale operations.

Here is what Upslope Capital Management said about the company in its Q4 2024 investor letter:

“Charles River Laboratories International, Inc. (NYSE:CRL) is a pharmaceutical services business, whose key offerings include drug discovery support and safety testing, research models, and outsourced manufacturing. The company holds leading market share positions in several of its business lines and has worked on ~80% of all drugs approved over the last five years. Customers are mostly biotech (40% of revenue) and pharma (30%) businesses – largely located in North America (70%) and Europe (25%).

Like plenty of other healthcare businesses that boomed during the COVID era, Charles River has had a challenging few years. Just recently – yesterday to be exact – the Company disappointed the Street with soft guidance for 2025. In Upslope’s view, CRL is a cyclical compounder going through a…cyclical downturn. Today, shares trade in-line with where they did five years ago – despite revenue and FCF/share that are 50% and 30% higher (while being in the midst of a cyclical downturn – i.e. real earnings power should be materially higher). While the company relies on volatile end markets, over the long run its own free cash flow tends to march higher, driven by advances in and rising demand for drug development. Upslope’s key thesis points include:…” (Click here to read the full text)