On September 25, 2024, investment bank Jefferies downgraded Fortrea Holdings Inc. from a 'buy' rating to 'hold'. This revision in rating reflects a more cautious outlook on the company's prospects within the contract research organization (CRO) sector.
The downgrade was primarily driven by perceived weaknesses in Fortrea's business model, particularly amidst ongoing pressure on biotechnology funding. Jefferies also suggested that the cost savings Fortrea expected to achieve by exiting transition services agreements (TSAs) might not be as substantial as initially anticipated.
This analyst action indicates a shift in market sentiment regarding Fortrea's ability to execute its post-spin strategy and realize expected efficiencies. The concerns raised by Jefferies highlight potential challenges to the company's future profitability and competitive positioning.
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