One-glance verdict
Overvalued
$5.77 our estimate vs market $16.88
Wall Street consensus: $20.55 (256.1% higher than our fair-value estimate)
193% above our estimate, beyond the bull case
Fundamentals snapshot
Fortrea Holdings Inc.
FTRE · NMS · Healthcare · Biotechnology
Current price
$16.88
52-week range
$8.30 - $21.39
Market cap
$1.61B
Balance sheet
Distressed
-0.33x Concerning
Net debt $949.20M. Interest coverage shows how many times profit covers the interest bill.
What stands out
1 Reward
2 Risks
1 rewards · 2 risks
- Reward Free cash flow was positive in 5/10 years.
- Risk Return on equity was -15.3% last year — the company lost money on shareholders' equity.
- Risk Operating margin compressed from 7.9% to 2.6% over 3 years.
What this company does
Fortrea Holdings Inc.
Fortrea Holdings gets paid by pharmaceutical and medical device companies to manage the complex testing of new products, a process known as a clinical trial. It handles everything from designing the research to analyzing the results needed for government approval. This is an essential service because drug makers rely on specialists like Fortrea to navigate the long and highly regulated path of bringing a new medicine or device to patients.
How the company got here
Fortrea is a relatively new name but has a long history. It was formed in mid-2023 when a large life sciences company called Labcorp decided to separate its drug development business into a new, independent, publicly-traded company. This business, which helps other companies test new drugs, has roots going back decades through a company called Covance, which Labcorp had previously acquired. The idea behind the spin-off was to create a more focused company dedicated entirely to managing clinical trials for other drug, biotech, and medical device makers.
What it actually does
Imagine a company has a promising new medicine but needs to prove it's safe and effective before it can be sold. Fortrea is the company they hire to run the human tests, known as clinical trials. Fortrea manages the entire process, from designing the study and recruiting patients to collecting the data and handling paperwork for regulators. Essentially, Fortrea doesn't invent new drugs itself; it provides the critical service of testing them for the companies that do.
Clinical Services
This is Fortrea's single and primary line of business, accounting for all of its revenue. It operates as a contract research organization, or CRO, which means pharmaceutical, biotechnology, and medical device companies hire it to manage every stage of the clinical trial process. This includes early-stage safety tests in small groups (Phase I), larger tests for effectiveness (Phases II and III), and studies after a drug is already on the market (Phase IV). Customers pay Fortrea for its expertise, global network of testing sites, and the staff needed to run these complex and highly regulated studies.
What management is betting on now
As a new standalone company, Fortrea's management is focused on establishing its own systems and becoming more efficient to improve its profitability. They are also concentrating on winning new business, particularly from growing biotechnology companies, to build a strong backlog (a pipeline of future work). The company is also making strategic acquisitions to expand its capabilities in the early phases of clinical development. A key goal is to improve how it runs trials using technology and data to make the process faster and more reliable for its customers.
Price history
How the share price has moved
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Loading price history…
Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q3
$-10.60M
FY2024 Q4
$13.90M
FY2025 Q1
$-127.10M
FY2025 Q2
$14.30M
FY2025 Q3
$79.50M
FY2025 Q4
$121.60M
FY2026 Q1
$-25.00M
FY2026 Q2
$19.90M
Revenue
$678.20M
Net income
$-13.20M
Diluted EPS
-0.14
Operating cash flow
$28.90M
Free cash flow
$19.90M
Fetching…
Sources
Revenue
$636.50M
Net income
$-23.60M
Diluted EPS
-0.25
Operating cash flow
$-17.00M
Free cash flow
$-25.00M
Fetching…
Sources
Revenue
$660.50M
Net income
$-32.50M
Diluted EPS
-0.25
Operating cash flow
$129.10M
Free cash flow
$121.60M
Fetching…
Sources
Revenue
$701.30M
Net income
$-15.90M
Diluted EPS
-0.17
Operating cash flow
$86.80M
Free cash flow
$79.50M
Fetching…
Sources
Revenue
$710.30M
Net income
$-374.90M
Diluted EPS
-4.14
Operating cash flow
$21.80M
Free cash flow
$14.30M
Fetching…
Sources
Revenue
$651.30M
Net income
$-562.90M
Diluted EPS
-6.25
Operating cash flow
$-124.20M
Free cash flow
$-127.10M
Fetching…
Sources
Revenue
$697.00M
Net income
$-61.20M
Diluted EPS
-0.68
Operating cash flow
$17.10M
Free cash flow
$13.90M
Fetching…
Sources
Revenue
$674.90M
Net income
$-27.90M
Diluted EPS
-0.31
Operating cash flow
$-2.40M
Free cash flow
$-10.60M
Fetching…
Sources
Is it cheap or expensive?
Fair value $5.77 vs current price $16.88
Wall Street consensus is the average analyst price target: $20.55 (256.1% higher than our fair-value estimate).
Our most-likely fair value is $5.77 a share — about 65.8% below today's price of $16.88, so the stock currently looks expensive (overvalued).
Is it drowning in debt?
Distressed
Net debt $949.2M. Interest coverage -0.3x.
Net debt
$949.20M
Interest coverage
-0.33x
Fortrea Holdings Inc.'s profit covers its interest bill about 0.0 times over. which is weaker than most peers shown here.
Distressed
Worse cushion
Baseline
Better cushion
FTRE
BASELINE
Fortrea Holdings Inc.
Total debt $1.12B Interest coverage -0.33x This is the baseline the peer rows are being compared against.
Total debt $16.25B Interest coverage 3.14x This peer still has a real interest-payment cushion, while FTRE does not.
Total debt $3.53B Interest coverage 5.38x This peer still has a real interest-payment cushion, while FTRE does not.
Total debt $144.11M Interest coverage 41.86x This peer still has a real interest-payment cushion, while FTRE does not.
Total debt $3.03B Interest coverage 3.75x This peer still has a real interest-payment cushion, while FTRE does not.
What you should know
The case for and against FTRE
1 Reward
2 Risks
Rewards
-
Free cash flow was positive in 5/10 years.
Risks
-
Return on equity was -15.3% last year — the company lost money on shareholders' equity.
-
Operating margin compressed from 7.9% to 2.6% over 3 years.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
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Forward P/E
14.83x
P/B
3.06x
P/S
0.60x
EV/EBITDA
26.16x
PEG ratio
0.34x
Profitability
How much profit each dollar creates
Gross margin
19.3%
Operating margin
2.6%
Net margin
-3.2%
ROE
-15.3%
ROA
0.6%
Health
Liquidity and balance-sheet strength
Debt / equity
2.13x
Current ratio
0.96x
Quick ratio
0.85x
Total debt
$1.12B
Total cash
$168.60M
Growth
How the business has been compounding
Revenue TTM
$2.68B
Revenue 5Y CAGR
-2.9%
EPS TTM
-0.83
EPS 5Y CAGR
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Cash flow
How much cash the business throws off
Operating CF TTM
$227.80M
Free CF TTM
$88.30M
FCF margin
3.3%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
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