Fortrea's 83% Plunge: Why the Pain Isn’t Paying Off Yet

The stock of Fortrea Holdings Inc. (FTRE) has fallen sharply since hitting an all-time high of $40.28 in April 2024, shedding 83% of its value by May 2025 to close at just $6.18. This collapse, fueled by a mix of declining revenues, margin pressures, and investor skepticism, raises a critical question: Is Fortrea now a contrarian opportunity, or does its trajectory still carry too many risks? The data suggests the latter.

The Stock’s Brutal Descent

The stock’s freefall began in earnest in late 2024, when Fortrea revised its 2025 guidance downward. By January 2025, the price had already dropped 55% from its April 2024 high, and it continued to deteriorate despite a brief rally around its March earnings call. . The volatility was extreme: On March 3, 2025—the day of its earnings announcement—trading volume spiked to 8.7 million shares, nearly double its usual volume, as the stock surged to $11.99 intraday before collapsing to a closing price of $10.38. By May, the pain had deepened further, with the stock down 68% from its January 2025 peak.

Financials Under Strain

While Fortrea’s Q1 2025 gross margin held steady at 20%, a figure consistent with pre-2024 levels, this masks underlying challenges. The company’s 2024 annual gross margin dipped to 17%, reflecting cost pressures or pricing concessions. More critically, revenue growth has stalled. After reporting $2.696 billion in 2024 revenue, Fortrea guided for 2025 revenues of just $2.45–2.55 billion—a 5–8% contraction. This downward revision, paired with adjusted EBITDA guidance of $170–200 million (vs. $280 million in 2024), signals a tough year ahead.

The Backlog Conundrum

Despite a 4.2% year-over-year increase in its backlog to $7.7 billion, this metric alone is insufficient to justify optimism. Backlogs are a lagging indicator, and their conversion to revenue depends on execution—a point of concern given Fortrea’s recent struggles. Management cited “pre-spin projects” and slower sales in oncology (a key therapeutic area) as challenges, but investors remain unconvinced. The stock’s post-earnings sell-off in March 2025, despite the 20% gross margin, underscores this skepticism.

Why the Bottom Isn’t Here

The case for Fortrea as an opportunity hinges on two assumptions: that margins stabilize, and that revenue rebounds. Both are questionable.

1. Margin Risks: The 20% gross margin in Q1 2025 is fragile. If the company faces further cost pressures or pricing wars—a distinct possibility in competitive industries—the margin could slip again.
2. Revenue Execution: The 2025 guidance already assumes a contraction. If Fortrea misses even this reduced target (possible given its Q1 performance and macroeconomic headwinds), the stock could fall further.
3. Valuation Context: At $6.18 per share, Fortrea’s market cap is now a fraction of its 2024 peak. However, with tangible book value diluted by losses and a P/S ratio already compressed, the downside protection is limited.

Conclusion: Wait for Better Odds

Fortrea’s 83% plunge has created a deeply discounted stock, but the fundamentals have yet to stabilize. A shrinking revenue base, margin fragility, and investor distrust—evident in the stock’s post-earnings volatility—suggest the pain isn’t over. Until Fortrea delivers consistent revenue growth, improves its backlog conversion, and demonstrates margin resilience, the risks outweigh the rewards.

The numbers tell the story: A 5–8% revenue drop from 2024 levels, a backlog that’s 4% higher but unproven in execution, and a stock that’s already shed 83% since its peak. For now, this is a cautionary tale, not a contrarian buy.

The data is clear: Fortrea’s path to recovery remains uncertain. Investors would be wise to wait for tangible signs of improvement before diving into the wreckage.