Bust of smuggling ring likely to beheadwind for LabCorp, says Wells Fargo

Wells Fargo analyst Timothy Daley tells investors in a research note that two weeks ago, a major supplier of research models to the U.S. was arrested for illegal smuggling of non-human primates, a critical part of the biologic R&D pipeline. This development is likely to be a headwind to pre-clinical CROs/Biopharma sponsors sourcing directly, or indirectly, from this supplier for re-sale or use in biologic drug studies like LabCorp (LH), but could potentially benefit pre-clinical CROs not exposed with secure sources of supply due to share gains and incremental pricing power, like Charles River (CRL). The analyst lowered the firm’s forecast for LabCorp’s pre-clincal CRO growth in FY23 by -24%, resulting in the firm’s FY23 EPS estimate falling from $17.73 to $17.47.