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Investing.com -- Fortrea (Nasdaq: FTRE) stock fell 15% following its announcement of lower-than-expected fourth quarter earnings and revenue, coupled with a cautious full-year 2025 guidance that fell short of analysts’ forecasts.
The contract research organization reported a fourth-quarter EPS of $0.18, which was significantly below the analyst estimate of $0.42. Revenue for the quarter also missed expectations, coming in at $697 million compared to the consensus estimate of $813 million. This represented a decline from the $709.7 million revenue reported in the same quarter the previous year. Furthermore, the company’s full-year guidance for 2025 anticipates revenues of $2.45-2.55 billion, below the consensus estimate of $2.74 billion.
Fortrea’s GAAP net loss widened to $(73.9) million for the fourth quarter, compared to a net loss of $(48.6) million in the fourth quarter of 2023. The adjusted EBITDA for the quarter was $56.0 million, a slight decrease from the $58.9 million reported in the prior year’s quarter. For the full year, the company’s revenue decreased to $2,696.4 million from $2,842.5 million in 2023, while GAAP net loss increased significantly to $(271.5) million from $(31.7) million.
The company’s CEO, Tom Pike, highlighted the improved book-to-bill ratio of 1.35x for the fourth quarter and the transition away from their former parent company’s services. However, the financial results and forward-looking guidance suggest a challenging period ahead.
Citi analyst Patrick Donnelly provided insight into the results and guidance, stating, "Given the more challenging clinical CRO backdrop on both bookings and cancellations, we were expecting results and guidance to come in below consensus estimates though the EBITDA guide in particular came in very light." The analyst reiterated a Neutral rating and a $23.00 price target on Fortrea.
Investors reacted negatively to the earnings miss and the cautious outlook, reflecting concerns about the company’s performance in an increasingly challenging market environment. Fortrea’s stock movement today is a clear indication of the market’s response to the company’s financial health and future expectations.
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