LH - Fortrea upgraded at Barclays after Q3 beat

2023-11-14 12:32:10 ET

Barclays upgraded Fortrea Holdings ( NASDAQ: FTRE ) to Overweight from Equal Weight after the contract research organization (CRO) announced better-than-expected Q3 revenue and adjusted EBITDA for 2023.

Fortrea ( FTRE ), a Laboratory Corp. ( LH ) spinoff, reported $776.4M in revenue and $70.5M in adj. EBITDA for the quarter on Monday after the bell, compared to $747M and $69.9M in Bloomberg consensus, respectively.

Barclays analyst Luke Sergott argues that the FTRE's strong Q3 bookings addressed concerns that the company was losing market share to three leading CROs.

"It's true that one quarter does not make a trend," Sergott wrote, noting that the robust booking trend showed that the company's initial 2023 guidance was de-risked.

However, "given where our expectations were and management's commentary on the health of the underlying market in addition to commentary from the rest of CROs, we are comfortable with bookings maintaining ~1.20x B2B over the near-to-medium term," Sergott added.

Sergott raises his FTRE price target to $38 from $29 per share, applying a ~14x EV/EBITDA multiple to his $350M adj. EBITDA estimate for the company in 2024, up from $315M previously.

More on Fortrea

• Fortrea Holdings: Many Questions Post The Spin-Off
• Fortrea Holdings Inc. (FTRE) Q2 2023 Earnings Call Transcript
• Fortrea Holdings Non-GAAP EPS of $0.24, revenue of $776.4M
• Activist Starboard takes more than 5% stake in Fortrea Holdings (update)
• Historical earnings data for Fortrea Holdings

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