Drug Development Inputs & Services Stocks Q4 Results: Benchmarking Fortrea (NASDAQ:FTRE)
March 18, 2025
Let’s dig into the relative performance of Fortrea (NASDAQ:FTRE) and its peers as we unravel the now-completed Q4 drug development inputs & services earnings season.
Companies specializing in drug development inputs and services play a crucial role in the pharmaceutical and biotechnology value chain. Essential support for drug discovery, preclinical testing, and manufacturing means stable demand, as pharmaceutical companies often outsource non-core functions with medium to long-term contracts. However, the business model faces high capital requirements, customer concentration, and vulnerability to shifts in biopharma R&D budgets or regulatory frameworks. Looking ahead, the industry will likely enjoy tailwinds such as increasing investment in biologics, cell and gene therapies, and advancements in precision medicine, which drive demand for sophisticated tools and services. There is a growing trend of outsourcing in drug development for nimbleness and cost efficiency, which benefits the industry. On the flip side, potential headwinds include pricing pressures as efforts to contain healthcare costs are always top of mind. An evolving regulatory backdrop could also slow innovation or client activity.
The 8 drug development inputs & services stocks we track reported a mixed Q4. As a group, revenues beat analysts’ consensus estimates by 0.8%.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 13.1% since the latest earnings results.
Weakest Q4: Fortrea (NASDAQ:FTRE)
Spun off from Labcorp in 2023 to focus exclusively on clinical research services, Fortrea (NASDAQ:FTRE) is a contract research organization that helps pharmaceutical, biotech, and medical device companies develop and bring their products to market through clinical trials and support services.
Fortrea reported revenues of $697 million, down 1.8% year on year. This print fell short of analysts’ expectations by 0.9%. Overall, it was a disappointing quarter for the company with full-year revenue guidance missing analysts’ expectations.
“Our intense focus on our customers’ success and creating a better customer experience has resulted in the stronger demand that is reflected in this quarter’s book-to-bill,” said Tom Pike, chairman and CEO of Fortrea.
Fortrea delivered the weakest performance against analyst estimates, slowest revenue growth, and weakest full-year guidance update of the whole group. Unsurprisingly, the stock is down 33.7% since reporting and currently trades at $9.19.
Serving as the guardian of some of medicine's most valuable materials, Azenta (NASDAQ:AZTA) provides biological sample management, storage, and genomic services that help pharmaceutical and biotechnology companies preserve and analyze critical research materials.
Azenta reported revenues of $147.5 million, up 4.1% year on year, outperforming analysts’ expectations by 1.1%. The business had a very strong quarter with an impressive beat of analysts’ EPS estimates.
Although it had a fine quarter compared to its peers, the market seems unhappy with the results as the stock is down 29.2% since reporting. It currently trades at $36.80.
Founded in 1923 and serving as a critical link in the pharmaceutical supply chain, West Pharmaceutical Services (NYSE:WST) manufactures specialized packaging, containment systems, and delivery devices for injectable drugs and healthcare products.
West Pharmaceutical Services reported revenues of $748.8 million, up 2.3% year on year, exceeding analysts’ expectations by 1.2%. Still, it was a softer quarter as it posted full-year revenue guidance missing analysts’ expectations.
As expected, the stock is down 28% since the results and currently trades at $232.58.
Founded in 1992 as a scientifically-driven alternative to traditional contract research organizations, Medpace (NASDAQ:MEDP) provides outsourced clinical trial management and research services to help pharmaceutical, biotechnology, and medical device companies develop new treatments.
Medpace reported revenues of $536.6 million, up 7.7% year on year. This print was in line with analysts’ expectations. Zooming out, it was a slower quarter as it produced full-year revenue guidance missing analysts’ expectations.
The stock is down 8.3% since reporting and currently trades at $324.26.
Created from the 2016 merger of Quintiles (a clinical research organization) and IMS Health (a healthcare data specialist), IQVIA (NYSE:IQV) provides clinical research services, data analytics, and technology solutions to help pharmaceutical companies develop and market medications more effectively.
IQVIA reported revenues of $3.96 billion, up 2.3% year on year. This result beat analysts’ expectations by 0.6%. Aside from that, it was a mixed quarter as it also recorded a narrow beat of analysts’ constant currency revenue estimates but full-year revenue guidance slightly missing analysts’ expectations.
The stock is down 10.5% since reporting and currently trades at $183.75.
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