Charles River Benefits From Lower Tax Rate; Raising FVE to $244, Yet Shares Remain Expensive

Charles River reported third-quarter revenue of $896 million, representing an increase of 21% from the prior-year period. GAAP earnings per share of $2.01 was up from $1.72 in the second quarter. We’ve updated our model with the latest results, and we raised our fair value estimate to $244 per share from $225 due to management’s lower-than-expected tax rate for 2021, $115 million in recent divestitures, and the impact of the time value of money. We maintain our narrow moat, which is based on intangible assets and switching costs associated with Charles River’s leading research models and its discovery and safety assessment services.