Fortrea Holdings Inc. (FTRE) AI Stock Analysis

• Market Cap: $496.10M
• Dividend Yield: N/A
• Average Volume (3M): 2.81M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.61
• Revenue Growth: -13.27%
• EPS Growth: -9015.30%
• Country: US
• Employees: 15,500
• Sector: Healthcare
• Sector Strength: 65
• Industry: Biotechnology
• EPS (TTM): -3.45
• Shares Outstanding: 90,200,000
• 10 Day Avg. Volume: 2,649,291
• 30 Day Avg. Volume: 2,814,793
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.29
• Price to Cash Flow (P/CF): 11.60
• P/FCF Ratio: 14.20
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $9.00
• Price Target Upside: 69.17% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 8

Fortrea Holdings Inc.'s stock score is impacted by significant financial and operational challenges, including declining revenues and profitability. Despite these issues, strengths in cash flow management and a solid balance sheet provide some stability. Technical indicators suggest the stock is oversold, which might attract cautious investors. The company's valuation is unattractive due to its negative P/E ratio. Strategic changes in the board of directors offer potential for future improvements, but near-term challenges persist.

Positive Factors

Bookings Performance

The company continues to see growth in its bookings, with a stronger than expected book-to-bill ratio of 1.35x for the quarter.

Restructuring Benefits

FTRE has initiated restructuring programs leading to significant savings in net SG&A expenses, with further improvements expected in the following years.

Venture Capital Funding

Biopharma funding from venture capital increased by 22% year-over-year, which is viewed as positive given biotech makes up a significant portion of FTRE's portfolio.

Negative Factors

Communication Strategy

FTRE abruptly cancelled two conferences and our planned vNDR, raising concerns about the company's communication strategy.

Earnings Performance

FTRE's Q4:24 results missed expectations, with adjusted EPS and EBITDA significantly below consensus estimates.

Revenue Outlook

Management introduced 2025 guidance that was below street expectations.

Fortrea Holdings Inc. Business Overview & Revenue Model

Company Description

Fortrea Holdings Inc., a contract research organization, primarily engages in the provision of biopharmaceutical product and medical device development services worldwide. It operates through two segments: Clinical Services and Enabling Services. The Clinical Services segment provides across the clinical pharmacology and clinical development spectrum. The Enabling Services segment provides patient access and clinical trial technology solutions to customers that streamline complex randomization and optimize the trial drug supply process. The company offers delivery models that include full service, functional service provider, and hybrid service structures. It also offers phase I-IV clinical trial management, differentiated technology enabled trial solutions, and post approval services. The company serves pharmaceutical, biotechnology, and medical device organizations. Fortrea Holdings Inc. was incorporated in 2023 and is based in Durham, North Carolina.

How the Company Makes Money

Fortrea Holdings Inc. makes money primarily through service contracts with pharmaceutical, biotechnology, and medical device companies. These contracts involve conducting clinical trials, providing laboratory services, and offering consulting in regulatory and compliance matters. The company's revenue streams are largely driven by the volume and scope of clinical trials managed, with additional income generated through strategic partnerships and collaborations with other stakeholders in the healthcare sector. Fortrea's expertise in efficiently managing the complexities of drug development processes enables it to secure long-term contracts and repeat business from its clients.

Fortrea Holdings Inc. Financial Statement Overview

Summary

Fortrea Holdings Inc. is experiencing revenue and profitability challenges with declining revenues and negative net margins. Despite these issues, the company maintains a strong balance sheet with low leverage and a robust equity ratio. Cash flow management is a notable strength, with substantial free cash flow growth supporting liquidity.

Income Statement

Fortrea Holdings Inc. experienced a decline in revenue from $3.11 billion in 2023 to $2.70 billion in 2024, translating to a negative growth rate. The gross profit margin is high at 100%, indicating the company covers its direct costs effectively. However, the net profit margin is negative due to substantial net losses, pointing to challenges in managing operating expenses and other costs. The EBIT margin decreased to 1.19%, and the EBITDA margin turned negative, reflecting operational struggles.

Balance Sheet

The company shows a stable equity base with a debt-to-equity ratio of 0.11 in 2024, which is favorable compared to the high leverage in 2023. The return on equity is negative, affected by net losses, but the equity ratio remains strong at 38.06%, indicating a sound financial structure with a good proportion of equity financing.

Cash Flow

Fortrea Holdings Inc. demonstrated strong cash flow management with a significant increase in free cash flow from $127.1 million in 2023 to $237.3 million in 2024. The operating cash flow to net income ratio is robust, suggesting effective cash generation relative to net income. The free cash flow to net income ratio also highlights the company's ability to maintain liquidity despite net losses.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement		Total Revenue
2.70B	3.11B	3.10B	3.06B
	Gross Profit
534.20M	520.40M	621.70M	604.40M
	EBIT
-161.90M	63.10M	185.20M	114.30M
	EBITDA
-64.30M	167.30M	354.60M	335.20M
	Net Income Common Stockholders
-328.50M	-3.40M	58.40M	98.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
118.50M	108.60M	112.00M	94.60M
	Total Assets
3.58B	4.36B	4.29B	4.37B
	Total Debt
148.80M	1.68B	63.40M	77.20M
	Net Debt
30.30M	1.57B	-48.60M	-17.40M
	Total Liabilities
2.22B	2.62B	945.30M	1.11B
	Stockholders Equity
1.36B	1.74B	3.34B	3.26B
Cash Flow		Free Cash Flow
237.30M	127.10M	33.10M	143.30M
	Operating Cash Flow
262.80M	167.40M	87.50M	169.80M
	Investing Cash Flow
251.60M	-31.80M	-54.00M	-26.20M
	Financing Cash Flow
-497.80M	-139.00M	-8.70M	-128.50M

Fortrea Holdings Inc. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 5.32
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FTRE, the sentiment is Negative. The current price of 5.32 is below the 20-day moving average (MA) of 6.28, below the 50-day MA of 9.74, and below the 200-day MA of 17.98, indicating a bearish trend. The MACD of -1.33 indicates Negative momentum. The RSI at 31.31 is Neutral, neither overbought nor oversold. The STOCH value of 35.84 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for FTRE.

Fortrea Holdings Inc. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AVXL	62 Neutral	$753.67M	―	-37.72%	―	―	-3.08%
FTRE	55 Neutral	$496.10M	―	-17.51%	―	-13.27%	-9015.30%
Sector *	51 Neutral	$5.31B	3.33	-39.82%	2.92%	17.95%	1.84%
BVS	49 Neutral	$613.76M	―	-20.86%	―	11.89%	79.18%
BCAX	48 Neutral	$753.51M	―	34.94%	―	―	―
CBLL	46 Neutral	$555.60M	―	26.25%	―	―	―
COGT	37 Underperform	$494.11M	―	-99.54%	―	―	-2.53%

Fortrea Holdings Inc. Corporate Events

Fortrea Holdings Appoints Erin L. Russell as Director

On March 5, 2025, Fortrea Holdings Inc. appointed Erin L. Russell as a Class II director, effective March 7, 2025, following an agreement with Starboard Value LP. Ms. Russell, who has extensive experience in finance and healthcare, will hold the position until the 2025 Annual Meeting of Stockholders. Her appointment is expected to enhance the company’s strategic direction given her background in executive and board roles across various healthcare and financial organizations.

Fortrea Holdings Inc. Appoints New Independent Director

On February 21, 2025, Fortrea Holdings Inc. entered a cooperation agreement with Starboard Value LP, leading to the appointment of Erin L. Russell as an independent director on Fortrea’s board. This move, alongside the resignation of board member Andrew Eckert, reflects Fortrea’s strategic efforts to enhance governance and drive shareholder value. The agreement grants Starboard the right to appoint another board member, contingent on maintaining a specified ownership threshold, and includes standstill and voting commitments. The collaboration is seen as beneficial for Fortrea and its stakeholders, aiming to leverage Ms. Russell’s expertise for financial and operational improvements.