Charles River Laboratories 2Q26 Recap: Another Strong Bookings/Proposals Quarter Points to Sustainable DSA Growth; Upgrade to Overweight from Neutral

Research evidence excerpt

J P M O R G A N

North America Equity Research

05 August 2026

Charles River Laboratories

2Q26 Recap: Another Strong Bookings/Proposals

▲Overweight

Quarter Points to Sustainable DSA Growth; Upgrade to

Previous: Neutral

CRL, CRL US

Overweight from Neutral

Price (04 Aug 26):$234.12

▲Price Target (Dec-27):$310.00

Prior (Dec-26):$180.00

CRL delivered strong 2Q results while raising 2026 guidance on the back of a 1.19

DSA B2B, which came in above the heightened buy-side bar, based on our

conversations, post-clinical CRO prints that was closer to ~1.10 (recall, heading

into earnings we believed the buy side was initially at ~1.05). B2B came in above

1.0 for the third quarter in a row and was the highest its been in about four years

driven by sequential bookings growth of +13% q/q. Management characterized

demand as broad based between biotech and large pharma and highlighted that

proposal volume was up +10% y/y in our follow-up (vs. +9% in 1Q), while also

indicating that its capture rate has also increased. Looking ahead, CRL raised DSA

growth expectations for the year while pointing to DSA growth of +LSD in 2H

while reiterating expectations for total company adj. OPM expansion of >+500bps

in 2H underpinned by the recent divestitures and acquisition of K.F. Stepping back,

following the strong bookings/proposals in 2Q, it is clear that CRL is seeing

sustainable momentum in DSA on the back of healthy biotech funding and large

pharma activity levels, which lends itself to more visible top- and bottom-line

growth moving forward. As such, we move to Overweight from Neutral while

rolling forward our DCF to establish a Dec. ‘27 price target of $310 (vs. Dec. ‘26

price target of $180 prior). Please see more on our upgrade thesis below.

As we noted earlier in our first take, CRL reported (press release/presentation) 2Q

results above the Street, with 2026 guidance raised. Specifically, 2Q revenues of

$1.0B grew +0.1% organically (vs. Street of -1.9%), translating into adj. EPS of

$3.02 (vs. Street of $2.74). Looking ahead, CRL raised its 2026 revenue guide,

calling for organic revenue growth of 0.0% to +1.0% (vs. Street of -0.3%) but

reiterated implied adj.…