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

The firm surprised the Street earlier in the week, when it reported Q3 EPS of 68 cents and revenues of $314 million. Analysts had been expecting 62 cents and $307.3 million. Management also guided FY07 EPS to $2.56-2.59 ($2.52 consensus) and FY07 revenues to $1.21-1.23 billion ($1.2B consensus). Lehman Brothers subsequently reiterated its "overweight" rating on the shares and UBS reiterated its "buy". 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.

Altogether, brokers recommend the issue with two "strong buys", three "buys" and seven "holds". Analysts see a 14% average annual growth rate, through the next five years. The CRL Price to Book ratio (2.37), EPS Growth rate (21.43%), Operating Margin (18.59%) and Net Profit Margin (12.75%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 95% of the outstanding shares. The stock is one of those used to calculate the S&P 400 MidCap Index. Over the past twelve months, it has traded between $41.00 and $63.76. A stop-loss of $53.50 looks good here.

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