Intel stock extends gains after report of possible U.S. government stake
On Monday, Citi analyst Patrick Donnelly maintained a Neutral rating on Fortrea (NASDAQ:FTRE) with a price target of $23.00, following the company’s fourth-quarter results. The stock, which has declined nearly 9% in the past week and is trading near its 52-week low of $13.48, appears undervalued according to InvestingPro analysis. Fortrea’s revenue for the quarter was reported at $697 million, falling short of the consensus estimate of $703 million. The earnings per share (EPS) also missed expectations, coming in at $0.18 compared to the consensus of $0.36. Furthermore, the company’s EBITDA was significantly below the consensus, at $56 million, representing an 8% margin. Despite recent challenges, InvestingPro data shows the company maintains a healthy current ratio of 1.18 and analysts expect profitability in the current year.
Fortrea’s business-to-business (B2B) ratio was 1.35 times, which exceeded expectations. However, the company’s initial guidance for the fiscal year 2025 indicates a revenue decline of 7% at the midpoint, with an expected range of $2.45 billion to $2.55 billion. This forecast is below the consensus estimate of $2.73 billion. Additionally, the EBITDA guidance for FY25 is set at $170 million to $200 million, which is notably lower than the consensus estimate of $275 million.
The analyst noted that the clinical contract research organization (CRO) sector is facing a more challenging environment, with both bookings and cancellations impacting results. Although the results and guidance were anticipated to fall below consensus estimates due to this backdrop, the EBITDA guidance was particularly disappointing. Management had previously mentioned seasonal factors, including lower revenues and higher costs at the beginning of the year, which are partly due to transition service agreements (TSAs). These factors are expected to be further discussed in the company’s conference call. For deeper insights into Fortrea’s valuation and growth prospects, including 8 additional exclusive ProTips and comprehensive financial analysis, check out the detailed Pro Research Report available on InvestingPro.
In other recent news, Fortrea has experienced a series of developments that have caught the attention of investors. Citi recently downgraded Fortrea’s stock from Buy to Neutral, adjusting the price target to $23.00. This change reflects concerns about the company’s business-to-business outlook and the potential impact of an unpredictable regulatory environment on its operations. Fortrea’s B2B ratio of 1.23x in the third quarter exceeded expectations, but challenges in the Clinical Research Organization sector and the company’s smaller market presence pose risks.
Additionally, Baird has downgraded Fortrea from Outperform to Neutral, lowering the price target to $25.00. This decision was influenced by Fortrea’s sudden cancellation of two conferences and a planned non-deal roadshow, raising questions about the company’s communication strategy. The lack of clear information has led Baird to take a cautious stance, refraining from making strong recommendations on the stock.
Both Citi and Baird have expressed concerns about Fortrea’s future, highlighting the potential for various outcomes, including possible acquisitions or unfavorable developments. These recent downgrades reflect a more cautious approach from analysts, as they await further clarity on Fortrea’s strategic direction and market performance.
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