Outsourcing helps biomedical firms initiate more drug candidates and move them through the pipeline faster, while controlling development costs. A recognized source of the assistance needed to smooth the process is headquartered in Wilmington, Massachusetts.

Charles River Laboratories International (NYSE: CRL) offers products and services required by pharmaceutical and biotechnical research organizations. Its Research Models and Services unit provides the purpose-bred rodents used in the development of new drugs, devices and therapies. The unit also offers vaccine support and in vitro technology products for testing of medical devices and injectable drugs. The Preclinical Services segment conducts a variety of research programs, including Phase I trials. The company operates from facilities in the United States, France, Germany, Italy, Japan and the United Kingdom. It is in the final stages of establishing a preclinical services joint venture in China.

The firm surprised the Street earlier in the month, when it reported Q1 EPS of $0.64 and revenues of $291.2 million. Analysts had been expecting $0.61 and $279.8 million. Management also guided FY07 EPS to $2.43-$2.53 ($2.49 consensus) and FY07 revenues to $1.16-$1.19 billion ($1.17B consensus). CRL shares popped on the news and have since been defining a bullish "pennant" consolidation pattern. Equities frequently exit pennants moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.

Brokers recommend the issue with three "strong buys," two "buys" and seven "holds." Analysts see a 14% average annual growth rate through the next five years. The CRL Price to Book ratio (2.10), Price to Cash Flow ratio (16.06), EPS Growth rate (38.03%), Operating Margin (18.18%) and Net Profit Margin (12.36%) compare favorably with industry, sector and S&P 500 averages.

The stock is one of those used to calculate the S&P 400 MidCap Index. Institutional investors hold about 95% of the outstanding shares. Over the past 52 weeks, CRL has traded between $33.73 and $52.30. A stop-loss of $45.50 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.