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By Siddhi Mahatole and Sriparna Roy
(Reuters) -Charles River Laboratories shares jumped 15% on Wednesday after the company raised its annual profit forecast due to improving demand for contract drug research services.
Separately, the Massachusetts-based company also said that it had reached an agreement with activist investor Elliott Management.
Charles River's stock climbed to $133.36, though it has fallen approximately 37% year-to-date as the company and other contract drugmakers face sluggish demand among smaller biotech companies, negatively impacting their financial performance.
The company raised its 2025 adjusted profit per share forecast to the range of $9.30 to $9.80, up from a previous expectation of $9.10 to $9.60 based on anticipated sales growth in the discovery and safety assessment segment during the first half of the year.
On an adjusted basis, it reported quarterly profit of $2.34 per share, beating analysts' average estimate of $2.08 per share, according to data compiled by LSEG.
Charles River also said it was launching a strategic review of the business, following a settlement with Elliott Investment, confirming an earlier Reuters report.
"We view this strategic action, coupled with a raise in guidance, positively given the political and industry pressures faced by the company in recent quarters," said Mizuho analyst Ann Hynes.
Elliott, the largest investor in the contract research firm, prompted the company to initiate a comprehensive business review, exploring various alternatives to enhance long-term stockholder value.
Shares of the company have also been affected this year by the U.S. Food and Drug Administration's plans to phase out conventional animal testing for certain drugs. However, Charles River said it does not expect the move to affect earnings in the near term.
(Reporting by Siddhi Mahatole and Sriparna Roy in Bengaluru; Editing by Shreya Biswas and Tasim Zahid)