Fortrea’s CEO Stocks Up While Analysts Speculate FTRE Is Undervalued

Fortrea Holdings Inc. (FTRE:US) is a contract research organization that mainly provides services to develop biopharmaceutical products and medical devices worldwide. Fortrea was formed as an independent entity after its parent company, Labcorp Holdings Inc (LH:US), spun off its Contract Research Organization (CRO). The spin-off was completed on July 03, 2023.

With a current market cap of around $2.26 billion, FTRE stock is listed on NASDAQ. While the stock price dwindled in 2024, the stock recently saw a rise of 4.83% in its last trading session.

CEO Buys In on FTRE

Since its inception, Fortrea has seen several trades from insiders. 

Most recently, Thomas H. Pike - the CEO, President, and Chairman at Fortrea - bought 10,000 shares on May 29. Coming to a value of $248,066, this was Mr. Pike’s first investment in FTRE stock in 2024.

He also purchased 20,000 FTRE shares on August 23, 2023, more than a month after Fortrea’s founding. 

As a professional, Thomas Pike holds over 30 years of experience in global services industries, particularly in the CRO industry. Before his current tenure, he was appointed the CEO and Board Member of Quintiles Transnational Holdings from 2012 to 2016 and served for about 22 years at Accenture. 

Quarterly Results & Stock Rating

Fortrea disclosed primarily satisfactory results for the first quarter of 2024: quarterly revenues reached $662.1 million while cash and cash equivalents amounted to $92.8 million. 

CEO Pike commented in the report, “We are making solid progress toward our goal of being the best choice among clinical research organizations for customers large and small."

FTRE last closed at $25.39 as of May 31, 2024, but the DCF model suggests that it should be worth much higher. Analysts on the other hand have given the pharma stock a price target of $39.79, which is 26% lower than the price DCF suggests.

The DCF model estimates a company's value by predicting future cash flows and converting them to present value, based on the idea that money is more valuable now due to its earning potential. In forecast cash flows for the next ten years, Fortrea's estimates range from $97 million in 2024 to $375.8 million in 2033.

Presently, Fortrea appears to be establishing itself as a significant player in the biopharmaceutical and medical device development sector. Given the aforementioned factors, FTRE's growth is strongly suggested and remains to be seen in the future.