What Happened?
Shares of clinical research company Fortrea Holdings (NASDAQ:FTRE) fell 18.5% in the pre-market session after the company delivered weak fourth-quarter 2024 results, with sales, operating profits, and earnings all falling short of Wall Street's expectations. Not exactly the kind of report investors like to see. But if there's a silver lining, it's the book-to-bill ratio of 1.35x which means demand for future orders is still strong, even though current revenues took a hit.
Profitability didn't fare much better. Adjusted EBITDA fell, due to higher restructuring costs and rising expenses. That led to a bigger operating loss compared to last year, which is why earnings came in weaker than expected.
And to top it off, the company issued weaker-than-expected full-year revenue and EBITDA guidance, suggesting those future orders might not translate into sales and profits as fast as expected.
Management did say that the company is shifting from a restructuring phase to a transformation strategy, which suggests there is a plan to accelerate growth. So while this quarter was a tough one, the demand trends suggest there could be better days ahead if they can execute on their strategy.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Fortrea? Access our full analysis report here, it’s free.
What The Market Is Telling Us
Fortrea’s shares are very volatile and have had 24 moves greater than 5% over the last year. But moves this big are rare even for Fortrea and indicate this news significantly impacted the market’s perception of the business.
Fortrea is down 38.4% since the beginning of the year, and at $11.48 per share, it is trading 71.5% below its 52-week high of $40.28 from April 2024. Investors who bought $1,000 worth of Fortrea’s shares at the IPO in June 2023 would now be looking at an investment worth $381.46.
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