(Reuters) – Charles River Laboratories beat Wall Street estimates for third-quarter profit on Wednesday, helped by demand for its drug discovery and development services, and trimmed the top end of its full-year revenue growth expectations.
Rising interest rates have squeezed funding for drug development programs and made biopharma firms more cautious about spending, hurting demand for contract research services.
The company reported revenue of $664 million from its discovery and safety assessment (DSA) unit, beating analysts’ average estimate of $607.69 million, according to LSEG data.
On an adjusted basis, the company made a profit of $2.72 per share ahead of analysts’ average estimate of $2.37.
Client spending in segments offering research models, which supplies lab rats to clients, and microbial solutions was muted, weighing in on the quarter.
The Wilmington, Massachusetts-based company narrowed its full-year revenue growth and adjusted profit forecast.
It now expects annual revenue growth between 2.5% and 3.5%, from a prior forecast of 2.5% to 4.5%.
The company sees an annual profit of $10.50 per share to $10.70 per share from $10.30 per share – $10.90 per share previously expected.
It, however, said there are some early signs of favorable demand trends, such as a reduction in the cancellation rate for its services for the safety assessment of new drugs.
Charles River’s larger rivals, such as Thermo Fisher Scientific and Danaher, have signaled a weak demand and slashed their annual sales forecasts.
Thermo Fisher has warned slow demand could continue to weigh on the sector into the next year.
Charles River’s total revenue for the third quarter rose 3.8% to $1.03 billion, compared to the average analysts’ estimates of $1 billion.
(Reporting by Sriparna Roy in Bengaluru; Editing by Tasim Zahid)
