On Tuesday, BofA Securities adjusted its outlook for Forterra (NASDAQ: NASDAQ:FRTA) shares, reducing the price target to $27 from the previous $33 while maintaining an Underperform rating on the stock.
The adjustment comes after Forterra's management revised its full-year 2024 sales and adjusted EBITDA guidance downward more than what was anticipated from the divestiture of the Endpoint Clinical and Fortrea Patient Access businesses.
The divestiture was expected to impact Forterra's sales by $250 million and adjusted EBITDA by $30 million. However, the new guidance suggests additional decreases of approximately $100 million in sales and $20 million in adjusted EBITDA, indicating ongoing execution issues within the company.
Despite a robust biotech funding environment in the first quarter, which benefits around half of Forterra's client base, the company faced several setbacks.
Forterra reported a client moving a project in-house, a rescheduled major contract which is now delayed by six weeks, a reduction in change orders, and fewer passthroughs than anticipated. These events have contributed to a lower than expected sales outcome and a quarterly book-to-bill ratio of 1.11 times.
While management aims for a book-to-bill ratio of 1.20 times for the remainder of fiscal year 2024, the report from BofA Securities suggests that some of the challenges faced by Forterra may continue to affect its performance.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.