Palm Beach, FL 1/10/12 (StreetBeat) -- What: Shares of drug research contractor Charles River Laboratories International (NYSE: CRL) spiked 19% on Tuesday on reports that management is considering a sale of the company.So what: Citing an article published by The Deal Reporter last night, Wall Street analyst R.W. Baird said that a deal is imminent and that the company could fetch as much as $40 per share -- a whopping 45% premium to yesterday's close. Of course, even if the rumors are unfounded, the buzz alone should draw a ton of attention to Charles River's seemingly undervalued business units.
Now what: Charles River may be one takeover target worth looking into. Even with today's big pop, the stock is still off more than 20% from its 52-week highs and currently trades at a forward P/E of 12. Fools know never to buy a stock based on buyout buzz alone, but Charles River's solid reputation in the lab testing space, big cash flow generation, and -- most importantly -- reasonable valuation might provide enough downside protection to make the bet a safe one.
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