UPDATE: Needham & Company Starts First Advantage (FA) at Hold

(Updated - September 20, 2022 4:08 PM EDT)

Needham & Company analyst Kyle Peterson initiates coverage on First Advantage (NASDAQ: FA) with a Hold rating.

The analyst comments "We view FA as a top-notch company in the background screening space, with notable highlights being that it has the highest EBITDA margins of the three public companies, and it was the only one that generated positive organic growth during 2020. In addition, FA has the lowest net leverage ratio and the only active share repurchase program of the three publicly traded background screening companies. However, we are concerned that some growth may have been "pulled forward" during 2020, especially due to FA's vertical mix which is more skewed towards e-commerce and home delivery, both of which performed well at the onset of the pandemic. We would become more constructive on the shares in the event of continued beat and raise quarterly performances, as it would give us more comfort regarding the "durability" of the company's strong organic growth, or a transformative acquisition that would diversify the business and help FA gain share relative to STER and HRT."

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 $13.88 yesterday.

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