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On Thursday, RBC Capital Markets reaffirmed their Sector Perform rating on First Advantage (NASDAQ:FA) stock, maintaining a steady price target of $20.00. The firm’s target represents potential upside from the current stock price of $17.12, though InvestingPro analysis suggests the stock is currently fairly valued. The firm’s analyst highlighted the company’s recent Investor Day, where First Advantage outlined its growth strategy, emphasizing innovation, market expansion, and strategic investments as key drivers.
During the event, First Advantage focused on its Digital ID product, which targets a $10 billion total addressable market (TAM) in combating identity fraud. With current revenues of $1.05 billion and a market capitalization of approximately $3 billion, the company’s investment in artificial intelligence (AI), automation, and a vertical-specific go-to-market approach were also underscored as integral to its growth plans.
In addition to technological advancements, First Advantage identified significant growth opportunities in international markets, as well as the potential for upselling and cross-selling within its existing client base, including the legacy Sterling accounts. The company’s proprietary SmartHub technology and data assets are expected to support organic revenue growth of 7-9%. InvestingPro data reveals strong recent performance with revenue growth of 38% in the last twelve months, and analysts expect continued sales growth this year.Want deeper insights? The comprehensive Pro Research Report for First Advantage, available on InvestingPro, offers expert analysis and actionable intelligence for smarter investment decisions.
Looking ahead to fiscal year 2028, First Advantage has set ambitious financial targets, including an EBITDA margin of 31-32% and adjusted earnings per share (EPS) in the range of $1.65 to $2.00. The company’s strong free cash flow, with an anticipated conversion rate of over 90% of adjusted net income (ANI), positions it to return capital to shareholders through buybacks and dividends. Additionally, First Advantage is poised to engage in accretive mergers and acquisitions (M&A) to further its long-term growth objectives.
In other recent news, First Advantage Corp reported its Q1 2025 earnings, which surpassed analyst expectations with an adjusted diluted EPS of $0.17, compared to the forecasted $0.13. The company also reported revenue of $355 million, exceeding the anticipated $344.66 million. First Advantage maintained a strong customer retention rate of 96% and achieved record enterprise bookings. The company reported an adjusted EBITDA of $92 million, reflecting a 26% margin, which is an increase of 200 basis points from the previous year. The firm is making significant progress in its strategic initiatives, including the integration of Sterling and advancements in AI technology. First Advantage reaffirmed its full-year 2025 guidance, projecting revenue growth of 2-4% in early 2026. The company also anticipates Q2 revenue to range between -2% and +2%. Analyst firm Stifel noted the company’s strong performance amid macroeconomic uncertainty, highlighting the ongoing integration of Sterling and successful execution of strategic priorities.
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