What Happened?

Shares of lab services company Charles River Laboratories (NYSE: CRL) jumped 7.5% in the morning session after the company announced a plasmid DNA manufacturing agreement with Elly's Team, a parent-led foundation working to find a cure for a rare genetic disorder. 

The contract development and manufacturing organization (CDMO) agreement involved producing critical materials for a Phase I clinical trial targeting a neurodevelopmental disorder known as NEDAMSS. This partnership was part of Charles River's Cell and Gene Therapy Accelerator Program, which provides gene therapy CDMO capabilities and advisory services. The news highlighted the company's expanding role in the advanced therapies market, a high-growth area within the biopharmaceutical industry. By supporting the development of potentially curative treatments for ultra-rare diseases, Charles River showcased its specialized manufacturing capabilities, which likely bolstered investor confidence in its long-term growth prospects.

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What Is The Market Telling Us

Charles River Laboratories’s shares are somewhat volatile and have had 14 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 11 days ago when the stock dropped 3% on the news that the U.S. administration announced a sharp escalation in trade tensions by threatening new tariffs on Canada. 

The wider market sentiment turned negative after the White House announced plans to impose a 35% tariff on Canadian imports, sparking renewed fears of a trade war. This news prompted a sell-off across major U.S. indexes, including the S&P 500 and the Dow Jones Industrial Average, as investors grew concerned about the potential economic impact of escalating protectionist policies. The healthcare sector is especially vulnerable to such tensions due to its deeply integrated supply chains with Canada for pharmaceuticals and medical devices, meaning increased costs and potential disruptions. Additionally, ongoing U.S. policy headwinds aimed at lowering drug prices and specific corporate challenges, like those faced by UnitedHealth Group, further compounded the sector's decline. As a result, the Health Care SPDR ETF (XLV) fell 1.0%, underperforming even as major indices pared some losses.

Charles River Laboratories is down 11.6% since the beginning of the year, and at $161.39 per share, it is trading 34.2% below its 52-week high of $245.29 from July 2024. Investors who bought $1,000 worth of Charles River Laboratories’s shares 5 years ago would now be looking at an investment worth $814.46.

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