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Fortrea Holdings Inc. (FTRE)
:FTRE
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Fortrea Holdings Inc.
(NASDAQ:FTRE)
Rating:49Neutral
Price Target:
$5.00
▼(-15.40%Downside)
Positive Factors
Financial Performance
Adjusted EBITDA of $30 million came in nicely above the $11 million estimate, signaling stronger financial performance.
Leadership Change
Fortrea announced that it has appointed Anshul Thakral as president and CEO, which positively influenced after-hours trading.
Negative Factors
Bookings Performance
The company’s new awards performance was disappointing, with delays in biotech decision-making and softness in clinical pharmacology affecting the net book-to-bill ratio.
Market Environment
The weak biotech funding environment could lead to a decrease in R&D spending by biopharmaceutical companies, negatively affecting Fortrea.
Operational Challenges
Fortrea has a limited history of operating as a standalone business and could continue to lose share due to execution issues and spin-related disruptions.
Fortrea Holdings Inc. (FTRE) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$534.85M
Dividend YieldN/A
Average Volume (3M)3.36M
Price to Earnings (P/E)―
Beta (1Y)1.39
Revenue Growth-10.69%
EPS Growth-527.14%
CountryUS
Employees15,000
SectorHealthcare
Sector Strength58
IndustryBiotechnology
Share Statistics
EPS (TTM)0.02
Shares Outstanding90,500,000
10 Day Avg. Volume2,891,472
30 Day Avg. Volume3,355,921
Financial Highlights & Ratios
PEG Ratio<0.01
Price to Book (P/B)0.55
Price to Sales (P/S)0.00
P/FCF Ratio3.29
Enterprise Value/Market Cap3.11
Enterprise Value/Revenue0.15
Enterprise Value/Gross Profit3.06
Enterprise Value/Ebitda-2.71
Forecast
1Y Price Target
$5.97Price Target Upside1.02% Upside
Rating ConsensusHold
Number of Analyst Covering10
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. 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. Earnings Call Summary
Earnings Call Date:May 12, 2025
(Q1-2025)
| % Change Since: -3.90%|
Next Earnings Date:Aug 18, 2025
Earnings Call Sentiment Neutral
Fortrea demonstrated resilience with strong pipeline management and cost-reduction initiatives, reaffirming guidance despite significant challenges such as goodwill impairment and a demanding biotech market environment. The integration of AI and technological advancements are promising for future operational efficiency. However, the financial strain from goodwill impairment and cash flow challenges pose concerns.Q1-2025 Updates
Positive Updates
Strong Pipeline and Book-to-Bill Ratio
The company reported a book-to-bill ratio of 1.02 times for the quarter and 1.14 times for the trailing 12 months, with a solid pipeline of opportunities expected to produce attractive book-to-bills for the remainder of the year.
Successful Cost Reduction Initiatives
Fortrea achieved a more than 8% reduction in permanent headcount over the last 12 months, leading to year-over-year growth in adjusted EBITDA and adjusted EPS for the first time since the spin. SG&A costs showed a 3% sequential reduction from Q4 2024.
Technological Innovations and AI Integration
The company is integrating AI tools like Microsoft Copilot across its operations to improve productivity, already observing more than a 50% increase in usage week-by-week.
Reaffirmed Guidance for 2025
Fortrea reaffirmed its guidance for the year, targeting revenues between $2.45 billion to $2.55 billion and adjusted EBITDA between $170 million to $200 million.
Recognition and Customer Satisfaction
Fortrea was named a leader in pharmacovigilance operations by Everest Group, and customer Net Promoter Scores continued to trend upwards, meeting Q1 targets.
Negative Updates
Goodwill Impairment and Net Loss
A non-cash pre-tax goodwill impairment charge of $488.8 million was recorded, leading to a net loss of $562.9 million for the quarter.
Challenges in Biotech Segment
The company faced protraction in decision-making in the biotech segment due to funding concerns and regulatory approval delays, impacting the startup of biotech projects.
Increased Operating Cash Flow Challenges
Negative operating cash flow of $124.2 million was reported, driven by an 11-day increase in day sales outstanding due to ERP conversion.
Higher SG&A Costs
SG&A costs increased by 1.4% year-over-year due to establishment costs of corporate functions as a standalone company, although sequential improvement was noted.
Company Guidance
In the Fortrea First Quarter 2025 Earnings Conference Call, the company reaffirmed its guidance for the year, projecting revenues in the range of $2.45 billion to $2.55 billion, with adjusted EBITDA expected to fall between $170 million and $200 million. The call highlighted a book-to-bill ratio of 1.02 times for the quarter and 1.14 times on a trailing 12-month basis, with a backlog exceeding $7.7 billion, reflecting a 4% growth year-over-year. Despite facing a challenging macroeconomic environment, the company expressed optimism about its pipeline, particularly in the biotech sector, and is targeting a long-term book-to-bill ratio of 1.2 times. Fortrea is implementing a $150 million cost reduction initiative, with an anticipated net benefit of $90 million to $100 million in 2025, aiming to improve margins through operational efficiencies and SG&A cost reductions. The effective tax rate for the quarter was reported at negative 2.7%, impacted by a goodwill impairment charge. Fortrea also highlighted a strong focus on maintaining a balanced customer mix, with the top 10 customers representing 56% of first-quarter revenues and the largest customer accounting for 15.4%.Fortrea Holdings Inc. Financial Statement Overview
Summary
The company's financial performance is challenged, with declining revenue and profitability, evidenced by negative EBIT and EBITDA margins. The balance sheet shows high leverage, posing financial risks, but there is some stability in asset financing. Cash flow management demonstrates resilience with positive operating cash flow, though growth remains limited.Income Statement
The income statement shows declining revenue and profitability over recent periods, with a significant net loss in the TTM period. Revenue decreased from previous periods, and the company has negative EBIT and EBITDA margins, indicating operational challenges and inefficiencies.45
Neutral
Balance Sheet
The balance sheet reflects a relatively high debt-to-equity ratio due to substantial debt levels, which could pose financial risks. Although stockholders' equity has decreased over time, the company maintains a reasonable equity ratio, indicating some stability in asset financing.50
Neutral
Cash Flow
Cash flow analysis indicates a decline in free cash flow compared to previous periods, yet the company maintains a positive operating cash flow. The free cash flow to net income ratio suggests some cash flow management strengths, although overall growth in free cash flow is limited.60
Neutral
| Breakdown | ||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 2.69B | 2.70B | 2.84B | 3.10B | 3.06B | Gross Profit |
| 542.80M | 534.20M | 590.60M | 621.70M | 604.40M | EBIT |
| -644.60M | -161.90M | 63.10M | 187.10M | 114.30M | EBITDA |
| -553.30M | -67.40M | 137.20M | 354.60M | 335.20M | Net Income Common Stockholders |
| -794.00M | -308.90M | -25.20M | 192.90M | 98.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 112.00M | 118.50M | 108.60M | 112.00M | 94.60M | Total Assets |
| 4.29B | 3.58B | 4.33B | 4.29B | 4.37B | Total Debt |
| 63.40M | 1.20B | 1.67B | 63.40M | 77.20M | Net Debt |
| -48.60M | 1.08B | 1.56B | -48.60M | -17.40M | Total Liabilities |
| 945.30M | 2.22B | 2.62B | 945.30M | 1.11B | Stockholders Equity |
| 3.34B | 1.36B | 1.71B | 3.34B | 3.26B |
| Cash Flow | Free Cash Flow | |||
| 145.10M | 237.30M | 127.10M | 33.10M | 143.30M | Operating Cash Flow |
| 164.20M | 262.80M | 167.40M | 87.50M | 169.80M | Investing Cash Flow |
| 276.90M | 251.60M | -31.80M | -54.00M | -26.20M | Financing Cash Flow |
| -430.70M | -497.80M | -140.80M | -8.70M | -128.50M |
Fortrea Holdings Inc. Technical Analysis
Neutral
5.91
Price Trends
5.32
Positive
9.07
Negative
14.46
Negative
Market Momentum
0.07
Negative
59.32
Neutral
80.12
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FTRE, the sentiment is Neutral. The current price of 5.91 is above the 20-day moving average (MA) of 4.79, above the 50-day MA of 5.32, and below the 200-day MA of 14.46, indicating a neutral trend. The MACD of 0.07 indicates Negative momentum. The RSI at 59.32 is Neutral, neither overbought nor oversold. The STOCH value of 80.12 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 2 New Risks
1.
Actions of activist stockholders could impact the pursuit of our business strategies, cause us to incur substantial costs, divert our management's attention and resources, and adversely affect our business, results of operations, liquidity, financial condition, and the trading price of our common stock. Q4, 2024
2.
We face risks arising from the restructuring of our operations. Q4, 2024
Fortrea Holdings Inc. Peers Comparison
Overall Rating
UnderperformOutperform
Sector (54)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
62 Neutral | $685.54M | ― | -40.13% | ― | ― | -3.08% | |
59 Neutral | $624.19M | ― | 26.25% | ― | ― | ― | |
54 Neutral | $5.37B | 3.26 | -45.10% | 3.30% | 16.81% | 0.02% | |
49 Neutral | $534.85M | ― | -61.58% | ― | -10.69% | -527.14% | |
48 Neutral | $591.17M | ― | 34.94% | ― | ― | ― | |
47 Neutral | $543.80M | ― | -19.79% | ― | 8.60% | -42.76% | |
37 Underperform | $806.10M | ― | -84.04% | ― | ― | -2.53% |
* Healthcare Sector Average
Performance Comparison
FTRE
Fortrea Holdings Inc.
5.91
-18.15
-75.44%
AVXL
Anavex Life Sciences
8.03
4.30
115.28%
COGT
Cogent Biosciences
7.08
-1.72
-19.55%
BVS
Bioventus
6.62
0.68
11.45%
BCAX
Bicara Therapeutics Inc.
10.84
-14.57
-57.34%
CBLL
Ceribell, Inc.
17.27
-8.23
-32.27%
Fortrea Holdings Inc. Corporate Events
Executive/Board ChangesShareholder Meetings
Fortrea Holdings Approves Key Proposals at Annual Meeting
Neutral
Jun 12, 2025
On June 10, 2025, Fortrea Holdings Inc. held its Annual Meeting of Stockholders where several key proposals were approved. The amendment and restatement of the 2023 Omnibus Incentive Plan was a significant highlight, increasing the number of shares by 6,500,000 and introducing new vesting and dividend conditions. Additionally, the election of directors, ratification of Deloitte & Touche LLP as the independent auditor, and the advisory vote on executive compensation were also approved.
The most recent analyst rating on (FTRE) stock is a Hold with a $21.00 price target. To see the full list of analyst forecasts on Fortrea Holdings Inc. stock, see the FTRE Stock Forecast page.
Business Operations and Strategy
Fortrea Holdings Inc. Adopts Stockholder Rights Plan
Neutral
Jun 12, 2025
On June 11, 2025, Fortrea Holdings Inc. announced the adoption of a limited-duration stockholder rights plan, effective immediately, to protect the interests of its stockholders amidst significant dislocation in its stock trading price. The plan, which expires on June 10, 2026, aims to ensure fair treatment in takeover scenarios and prevent hostile acquisitions without appropriate premiums. It allows stockholders to purchase additional shares at a discount if any entity acquires 10% or more of Fortrea’s common stock, encouraging potential acquirers to engage directly with the Board.
The most recent analyst rating on (FTRE) stock is a Hold with a $21.00 price target. To see the full list of analyst forecasts on Fortrea Holdings Inc. stock, see the FTRE Stock Forecast page.
Executive/Board ChangesBusiness Operations and Strategy
Fortrea Holdings Appoints Anshul Thakral as New CEO
Neutral
Jun 11, 2025
On June 11, 2025, Fortrea Holdings Inc. announced the appointment of Anshul Thakral as the new President and CEO, effective August 4, 2025, succeeding interim CEO Peter M. Neupert, who will remain as chairman of the board. Thakral, with over 20 years of experience in the life sciences sector, aims to focus on executing Fortrea’s transformation plan and enhancing its focus on profitable growth, while overseeing efforts to create additional value for customers, employees, and shareholders.
The most recent analyst rating on (FTRE) stock is a Hold with a $21.00 price target. To see the full list of analyst forecasts on Fortrea Holdings Inc. stock, see the FTRE Stock Forecast page.
Executive/Board ChangesBusiness Operations and Strategy
Fortrea Holdings Inc. Announces CEO Transition
Neutral
May 12, 2025
On May 12, 2025, Fortrea Holdings Inc. announced the departure of Thomas Pike as CEO and Board Chairman, effective May 13, 2025, with Peter M. Neupert stepping in as Interim CEO. This transition marks a planned succession as Fortrea continues its evolution as an independent entity following its spin-off from Labcorp Holdings Inc. Mr. Pike will remain as a consultant through September 2025, ensuring a smooth transition. The company is actively searching for a permanent CEO, while Mr. Neupert, with a strong background in healthcare and technology, will guide the company during this interim period. The announcement reflects Fortrea’s strategic planning for leadership continuity and its commitment to maintaining its position in the competitive contract research organization industry.
The most recent analyst rating on (FTRE) stock is a Hold with a $21.0000 price target. To see the full list of analyst forecasts on Fortrea Holdings Inc. stock, see the FTRE Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.