Jefferies Lowers PT Of Charles River Laboratories To $35 (CRL)

Jefferies its out with a report lowering the Price Target of Charles River Laboratories CRL due to a pessimistic EPS outlook. The report states, “CRL reported 4Q10 non-GAAP EPS of $0.60 on net revenues of $281.7M. This excludes ~$1M loss on discontinued ops (2c) and represents a lower than expected share count (2c). This compares to our estimate of $0.48 on $278.1M.” However, Jefferies cautioned, “Preclinical showed some signs of life this quarter, but the pulse is still faint. EPS for 2011 seems readily achievable, driven by deep cost cuts and share repurchase. To meet current 2012 consensus, topline growth must accelerate significantly from its current standstill. We haven't found that evidence yet.” “EPS growth is driven by cost-cutting and share purchase. We model 2011 EBIT growth of 8.4% or $15.5MM. Management cut $40MM in costs, mostly out of PCS, in 4Q alone. Cost cutting won't likely be repeated to drive that profit growth again in 2012. We only see that happening if revenue declines further, which would rule out $2.70 in 2012, in our opinion.” Jefferies kept Charles River Laboratories' Hold rating. Charles River Laboratories closed at $37.78 at Wednesday's close.