Charles River Laboratories International Inc. (Charles River (CRL)) stock traded higher Wednesday after the contract research organization raised its full-year 2026 financial guidance following second-quarter results that exceeded Wall Street expectations.

The company increased its fiscal 2026 adjusted earnings outlook to $11.15 to $11.45 per share, up from $10.80 to $11.30, compared with the analyst consensus estimate of $11.12.

Charles River also raised its 2026 revenue forecast to $3.879 billion to $3.920 billion, from $3.794 billion to $3.854 billion. Analysts were expecting $3.85 billion.

Second-Quarter Results

Adjusted earnings were $3.02 per share, topping the consensus estimate of $2.74.

Revenue declined 2.7% year over year to $1.004 billion, but exceeded the consensus estimate of $975.7 million. Organic revenue increased 0.1%, marking the company's first organic growth since the third quarter of 2023.

Discovery And Safety Assessment Shows Improving Demand

Revenue in the Discovery and Safety Assessment (DSA) segment declined 1.9% to $606.5 million, while organic revenue increased 0.2%, driven by higher study volume for regulated safety assessment services.

On its earnings call, the company said demand improved across multiple study types and modalities, including an increase in investigational new drug (IND)-enabling studies as clients shifted research earlier in the drug development process.

Demand for non-human primate-related studies also remained strong, reflecting continued investment in complex biologics.

Net bookings rose significantly from a year earlier and increased 12.6% sequentially to $701 million. The DSA backlog expanded to $1.97 billion, while the net book-to-bill ratio improved to 1.19x.

The company said both net bookings and the book-to-bill ratio reached their highest levels in nearly four years.

RMS Business Remains Under Pressure

Revenue in the Research Models and Services (RMS) segment declined 1.8% to $209.5 million, with organic revenue down 1.4% due to weaker North American demand for small research models and related services.

Higher sales of small research models in China partially offset the decline.

Charles River expects the RMS segment to post a low- to mid-single-digit organic revenue decline for the full year, primarily because lower research model volumes in North America continue to weigh on results.

The company attributed the weakness to flat National Institutes of Health budgets and slower grant processing, which have constrained spending by academic and government customers.

Revenue in the Manufacturing Solutions segment fell 6.3% to $188.1 million, reflecting the divestiture of its CDMO business. Organic revenue, however, increased 1.3%, supported by growth in the Microbial Solutions business.

CRL Price Action: Charles River shares were up 10.95% at $259.75 at the time of publication on Wednesday. The stock is trading at a new 52-week high, according to market data.