Looking back on drug development inputs & services stocks’ Q4 earnings, we examine this quarter’s best and worst performers, including Charles River Laboratories (NYSE:CRL) and its peers.
Companies specializing in drug development inputs and services play a crucial role in the pharmaceutical and biotechnology value chain. Essential support for drug discovery, preclinical testing, and manufacturing means stable demand, as pharmaceutical companies often outsource non-core functions with medium to long-term contracts. However, the business model faces high capital requirements, customer concentration, and vulnerability to shifts in biopharma R&D budgets or regulatory frameworks. Looking ahead, the industry will likely enjoy tailwinds such as increasing investment in biologics, cell and gene therapies, and advancements in precision medicine, which drive demand for sophisticated tools and services. There is a growing trend of outsourcing in drug development for nimbleness and cost efficiency, which benefits the industry. On the flip side, potential headwinds include pricing pressures as efforts to contain healthcare costs are always top of mind. An evolving regulatory backdrop could also slow innovation or client activity.
The 8 drug development inputs & services stocks we track reported a mixed Q4. As a group, revenues beat analysts’ consensus estimates by 0.8%.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 11.4% since the latest earnings results.
Charles River Laboratories (NYSE:CRL)
Founded in 1947, Charles River Laboratories (NYSE:CRL) provides laboratory services related to drug discovery, development solutions, and safety assessments for pharmaceutical and biotechnology companies.
Charles River Laboratories reported revenues of $1.00 billion, down 1.1% year on year. This print exceeded analysts’ expectations by 2.3%. Overall, it was a satisfactory quarter for the company with a solid beat of analysts’ organic revenue estimates but a miss of analysts’ full-year EPS guidance estimates.
James C. Foster, Chair, President and Chief Executive Officer, said, “Throughout 2024, we have launched initiatives to generate more revenue, aggressively reduce costs, and further strengthen our business. As we move into 2025, we see many of our global biopharmaceutical clients continuing to move forward with their restructuring and pipeline reprioritization activities, which are expected to constrain early-stage spending by many of these clients again in 2025. We believe these trends are stabilizing, and therefore, our view of the global biopharmaceutical demand environment remains unchanged. In addition, small and mid-sized biotechnology clients continued to benefit from a more favorable funding environment in 2024, and we expect biotechnology demand trends will be stable to slightly improved this year.”
Charles River Laboratories pulled off the biggest analyst estimates beat of the whole group. The stock is up 7.6% since reporting and currently trades at $166.
Is now the time to buy Charles River Laboratories? Access our full analysis of the earnings results here, it’s free.
Best Q4: Azenta (NASDAQ:AZTA)
Founded as a small biotech firm, Azenta (NASDAQ:AZTA) provides services for life sciences research and biopharmaceutical applications such as sample management, cold chain logistics, and storage services.
Azenta reported revenues of $147.5 million, up 4.1% year on year, outperforming analysts’ expectations by 1.1%. The business had a very strong quarter with an impressive beat of analysts’ EPS estimates.
Although it had a fine quarter compared to its peers, the market seems unhappy with the results as the stock is down 21.8% since reporting. It currently trades at $40.67.
Is now the time to buy Azenta? Access our full analysis of the earnings results here, it’s free.
Weakest Q4: Fortrea (NASDAQ:FTRE)
Spun off from Labcorp in 2023, Fortrea Holdings (NASDAQ:FTRE) provides contract research and development services for pharmaceutical and biotechnology companies, specializing in clinical trials, laboratory services, and data management.
Fortrea reported revenues of $697 million, down 1.8% year on year, falling short of analysts’ expectations by 0.9%. It was a disappointing quarter as it posted full-year revenue guidance missing analysts’ expectations.
Fortrea delivered the weakest performance against analyst estimates, slowest revenue growth, and weakest full-year guidance update in the group. As expected, the stock is down 17.8% since the results and currently trades at $11.39.
Read our full analysis of Fortrea’s results here.
Medpace (NASDAQ:MEDP)
Founded in 1992, Medpace Holdings (NASDAQ:MEDP) provides full-service clinical development services to pharmaceutical, biotechnology, and medical device companies, specializing in the design and management of complex clinical trials.
Medpace reported revenues of $536.6 million, up 7.7% year on year. This number met analysts’ expectations. Aside from that, it was a slower quarter as it logged full-year revenue guidance missing analysts’ expectations.
The stock is down 8.7% since reporting and currently trades at $323.
Read our full, actionable report on Medpace here, it’s free.
IQVIA (NYSE:IQV)
Formed in 2016 through the merger of IMS Health and Quintiles, offers advanced analytics, technology solutions, and clinical research services to life sciences companies, helping them accelerate drug development and optimize healthcare operations.
IQVIA reported revenues of $3.96 billion, up 2.3% year on year. This result topped analysts’ expectations by 0.6%. Taking a step back, it was a mixed quarter as it also logged a narrow beat of analysts’ constant currency revenue estimates but full-year revenue guidance slightly missing analysts’ expectations.
The stock is down 10.6% since reporting and currently trades at $183.57.
Read our full, actionable report on IQVIA here, it’s free.
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