Needham Reiterates Hold Rating on First Advantage (FA)

Needham analyst Kyle Peterson reiterated a Hold rating on First Advantage (NASDAQ: FA).

The analyst comments "We recently hosted investor meetings with Steven Marks (CFO), Joelle Smith (President), and Stephanie Gorman (IR). We came away incrementally positive on FA's plan to improve organic growth, reduce leverage, and focus on extracting synergies from the Sterling acquisition. On the organic growth front, we remain impressed with the company’s ability to add new logos and increase package density (this added 9% to Y/Y growth in 2Q), although we expect overall organic growth to remain subdued until hiring volumes improve. On the debt front, the focus on cash generation should help FA consistently reduce debt towards the target leverage ratio of 2-3x, although we expect the current leverage ratio (4.7x net debt/unsynergized EBITDA) will remain an overhang for now. We are maintaining our Hold rating."

For an analyst ratings summary and ratings history on First Advantage click here. For more ratings news on First Advantage click here.

Shares of First Advantage closed at $16.51 yesterday.

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