What Makes Charles River Laboratories (CRL) an Investment Bet?

In its third-quarter 2025 capitalist letter, the Madison Small Cap Fund highlighted stocks specified arsenic Charles River Laboratories International, Inc. (NYSE:CRL). Charles River Laboratories International, Inc. (NYSE:CRL) offers cause discovery, non-clinical development, and information investigating services that run done Research Models and Services (RMS), Discovery and Safety Assessment (DSA), and Manufacturing Solutions (Manufacturing) segments. The one-month instrumentality of Charles River Laboratories International, Inc. (NYSE:CRL) was -14.15%, and its shares mislaid 16.72% of their worth implicit the past 52 weeks. On November 21, 2025, Charles River Laboratories International, Inc. (NYSE:CRL) banal closed astatine $167.64 per share, with a marketplace capitalization of $8.25 billion.

Madison Small Cap Fund stated the pursuing regarding Charles River Laboratories International, Inc. (NYSE:CRL) successful its 3rd 4th 2025 capitalist letter:

“We initiated a presumption in Charles River Laboratories International, Inc. (NYSE:CRL) successful Q3. CRL is simply a high-quality institution successful the cause find and improvement outsourcing abstraction with a wide scope of services from basal probe to declaration manufacturing. The institution has operating margins of 20% oregon much and generates important escaped currency flow. The past fewer years person been challenging for companies successful the cause improvement space, arsenic superior has go progressively constrained and probe and improvement spending has remained stagnant. However, CRL has the operating past and premix of businesses to beryllium palmy implicit the agelong term. The lawsuit basal is divers and CRL benefits from the accrued dynamics of outsourcing by its biopharmaceutical clients. The company’s apical enactment has grown astatine a 12% compound yearly complaint implicit the past 10 years, adjacent with the caller downturn. Management is solid, and we’ve known them for decades. We judge Charles River’s net powerfulness tin scope astir $15 successful 2028, assuming humble growth. We besides usage a sum of the parts astatine ~12x EBITDA (earnings earlier interest, taxes, depreciation, and amortization) to measure the attractiveness of CRL. This implies an intrinsic worth of $228. Importantly, we deliberation we are being conservative, arsenic we don’t physique successful a resumption of double-digit gross maturation successful our valuation framework. However, we expect gross maturation of 4% from 2024 to 2028 and a humble borderline recovery, aided by restructuring and cost-outs.”