FA Stock Forecast & Price Target

First Advantage Corp is poised for positive financial growth driven by a robust customer base, which benefits from a strengthened product portfolio and impressive gross retention rates exceeding 96%. The company's revenue growth potential is underscored by an estimated industry CAGR of 6%, supported by rising hiring rates, increased post-onboarding product adoption, and a focus on expanding in underpenetrated international markets. Furthermore, projected cost synergies are expected to enhance pro-forma margins from 27% to 30-31% by FY27, signaling improved operational efficiency and profitability.

The financial outlook for First Advantage Corp is negatively impacted by several fundamental challenges, including a projected 10% decrease in forward-looking P/E multiple and adjusted EPS, reflecting weaker anticipated growth. The company's EBITDA margins face headwinds due to softer topline growth, high fixed costs, and a slower-than-expected hiring environment, which has already resulted in missed consensus estimates for 4Q24. Additionally, the significant ownership stake of Silver Lake, approximately 52%, may exert downward pressure on the stock, compounded by the risk of attrition among higher-margin customers.