Morgan Stanley upgrades Charles River, downgrades IQVIA in CRO sector reset

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Morgan Stanley upgraded Charles River Laboratories to Overweight and downgraded IQVIA Holdings to Equal-weight, citing improving biotech funding and portfolio changes that favor Charles River while longer-term AI and pharma insourcing uncertainty weighs on IQVIA. The brokerage set a $220 price target for Charles River, implying about 14 times its 2026 EBITDA estimate, and expects double-digit earnings growth through 2028. For IQVIA, Morgan Stanley lowered its price target to $200 from $225, noting that around 30% of typical clinical trial costs are tied to functions commonly outsourced to CROs and that large drugmakers are investing in AI-enabled infrastructure that could gradually shift some work internally. The bank also highlighted IQVIA's leverage profile, with higher interest costs and upcoming debt maturities potentially limiting future share repurchases.

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