Charles River Shares Soared: What You Need to Know

Before you go, we thought you'd like these...
Before you go close icon

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of drug research contractor Charles River Laboratories International (NYS: CRL) spiked 19% on Tuesday on reports that management is considering a sale of the company.

So what: Citing an article published by dealReporter last night, Wall Street analyst R.W. Baird said that a deal is imminent and that the company could fetch as much as $40 per share -- a whopping 45% premium to yesterday's close. Of course, even if the rumors are unfounded, the buzz alone should draw a ton of attention to Charles River's seemingly undervalued business units.

Now what: Charles River may be one takeover target worth looking into. Even with today's big pop, the stock is still off more than 20% from its 52-week highs and currently trades at a forward P/E of 12. Fools know never to buy a stock based on buyout buzz alone, but Charles River's solid reputation in the lab testing space, big cash flow generation, and -- most importantly -- reasonable valuation might provide enough downside protection to make the bet a safe one.

Interested in more info onCharles River?Add it to your watchlist.

At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Fool owns shares of Charles River. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners