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Fortrea Holdings Inc. (FTRE)
NASDAQ:FTRE
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Fortrea Holdings Inc.
(NASDAQ:FTRE)
52Neutral
Positive Factors
Bookings
The company continues to see growth in its bookings, with a stronger than expected book-to-bill ratio of 1.35x for the quarter.
Venture Capital
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
Earnings Guidance
Management introduced 2025 guidance that was below street expectations.
Financial Performance
FTRE's Q4:24 results missed expectations, with adjusted EPS and EBITDA significantly below consensus estimates.
Market Perception
Fortrea shares closed down 25% on the back of its underwhelming update.
Fortrea Holdings Inc. (FTRE) vs. S&P 500 (SPY)
Market Cap
$681.01M
Dividend YieldN/A
Average Volume (3M)2.41M
Price to Earnings (P/E)―
Beta (1Y)2.04
Revenue Growth-13.27%
EPS Growth-9015.30%
CountryUS
Employees15,500
SectorHealthcare
Sector Strength62
IndustryBiotechnology
Share Statistics
EPS (TTM)-3.45
Shares Outstanding90,200,000
10 Day Avg. Volume2,545,097
30 Day Avg. Volume2,408,247
Financial Highlights & Ratios
PEG RatioN/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 Ratio14.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$12.00Price Target Upside70.21% Upside
Rating ConsensusHold
Number of Analyst Covering7
Fortrea Holdings Inc. Business Overview & Revenue Model
Company DescriptionFortrea 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 MoneyFortrea Holdings Inc. generates revenue primarily through its clinical trial management services. The company earns money by partnering with pharmaceutical and biotechnology firms to conduct and manage clinical trials, a critical component in the drug development and regulatory approval process. These partnerships often involve long-term contracts where Fortrea provides a range of services, including patient recruitment, data management, regulatory compliance, and trial monitoring. Significant revenue streams come from these service fees, which are typically structured based on the complexity, duration, and scale of the clinical trials. Additionally, Fortrea may engage in strategic partnerships or collaborations with key industry players, enhancing its service offerings and expanding its market reach.
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.62
Positive
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.75
Positive
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.80
Positive
| 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
Negative
7.05
Price Trends
12.81
Negative
16.32
Negative
19.23
Negative
Market Momentum
-1.55
Positive
18.81
Positive
2.68
Positive
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 7.05 is below the 20-day moving average (MA) of 9.12, below the 50-day MA of 12.81, and below the 200-day MA of 19.23, indicating a bearish trend. The MACD of -1.55 indicates Positive momentum. The RSI at 18.81 is Positive, neither overbought nor oversold. The STOCH value of 2.68 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for FTRE.
Fortrea Holdings Inc. Risk Analysis
Fortrea Holdings Inc. disclosed 58 risk factors in its most recent earnings report. Fortrea Holdings Inc. reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Fortrea Holdings Inc. Peers Comparison
Overall Rating
UnderperformOutperform
Sector (48)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
62 Neutral | $729.85M | ― | -37.72% | ― | ― | -3.08% | |
56 Neutral | $689.03M | ― | 26.25% | ― | ― | ― | |
52 Neutral | $681.01M | ― | -17.51% | ― | -13.27% | -9015.30% | |
52 Neutral | $749.78M | ― | -20.86% | ― | 11.89% | 79.18% | |
48 Neutral | $6.86B | 1.11 | -50.22% | 2.47% | 16.71% | 1.53% | |
41 Neutral | $690.27M | ― | 34.94% | ― | ― | ― | |
35 Underperform | $681.96M | ― | -99.54% | ― | ― | -2.53% |
* Healthcare Sector Average
Performance Comparison
FTRE
Fortrea Holdings Inc.
7.51
-31.11
-80.55%
AVXL
Anavex Life Sciences
8.56
3.94
85.28%
COGT
Cogent Biosciences
5.72
-1.17
-16.98%
BVS
Bioventus
9.51
4.49
89.44%
BCAX
Bicara Therapeutics Inc.
13.26
-12.15
-47.82%
CBLL
Ceribell, Inc.
19.24
-6.26
-24.55%
Fortrea Holdings Inc. Earnings Call Summary
Earnings Call Date: Mar 3, 2025 | % Change Since: -49.10% | Next Earnings Date: May 19, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture, with strong new business wins and operational improvements offset by financial challenges from pre-spin project economics and a significant decline in profitability and revenue. The company is implementing cost-saving measures and expects long-term growth, but faces near-term financial pressures.Highlights
Strong Book-to-Bill Ratio
Fortrea Holdings Inc. achieved a book-to-bill ratio of 1.35 in the fourth quarter and 1.29 for the second half of the year, with an average of 1.2 since their spin-off.
Growth in Backlog
The company's backlog grew to $7.7 billion, reflecting a 4.2% increase over the past twelve months.
Successful TSA Exit
Fortrea Holdings Inc. successfully exited most of the transition service agreements with their former parent, reducing associated payments significantly.
Operational Improvements
The company achieved improved Net Promoter Scores and successfully launched new HR and finance ERP systems.
Debt Reduction
Fortrea Holdings Inc. reduced its debt by $475 million, leading to a 22% reduction in interest and securitization costs in the fourth quarter compared to the previous year.
Lowlights
Revenue Decline
Fourth-quarter revenues declined by 1.8% year-over-year to $697 million, with a full-year revenue decrease of 5.1% compared to 2023.
Lower Profitability of Pre-Spin Projects
Pre-spin projects were found to have less revenue and profitability than expected, negatively impacting financial performance in 2025.
Adjusted EBITDA Decline
Adjusted EBITDA for the full year 2024 was $202.5 million, a decrease from $245.8 million in 2023, with a margin decline from 8.6% to 7.5%.
Net Loss Increase
The net loss for full-year 2024 was $271.5 million, a significant increase from a net loss of $31.7 million in 2023.
Lower Revenue Guidance for 2025
The company provided a lower revenue guidance range of $2.45 billion to $2.55 billion for 2025 due to project mix and slower burning studies.
Company Guidance
In the Fortrea Holdings Inc. Fourth Quarter 2024 Earnings Conference Call, the company provided detailed guidance for 2025, projecting revenues in the range of $2.45 billion to $2.55 billion and adjusted EBITDA between $170 million and $200 million. The company reported a strong book-to-bill ratio of 1.35 for the fourth quarter and 1.16 for the trailing twelve months, with a backlog of approximately $7.7 billion, reflecting a 4.2% growth over the past year. Despite the strong bookings, Fortrea anticipates challenges in 2025 due to a mix of older projects that are later in their lifecycle, resulting in lower revenue and profitability than previously expected. The company is implementing transformation programs aiming for $40 to $50 million in net savings in 2025, with a focus on reducing SG&A costs and optimizing operations. Fortrea's long-term outlook includes a return to growth in the first half of 2026, supported by new project wins and improved operational efficiency.Fortrea Holdings Inc. Corporate Events
Executive/Board Changes
Fortrea Holdings Appoints Erin L. Russell as Director
Positive
Mar 10, 2025
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.
Executive/Board ChangesBusiness Operations and Strategy
Fortrea Holdings Inc. Appoints New Independent Director
Positive
Feb 21, 2025
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.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.