First Advantage (FA) may face slowing hiring on macro headwinds after Q1 topped estimates by Wall Street analysts, RBC Capital Markets said Friday in a report.
"We monitor for macro-related shocks that could impact quit rates over the near term" for First Advantage, which provides employment background screening, RBC said.
The company "continues to make progress on new wins and cross-sell," and the "solid progress on the Sterling acquisition cost synergies delivered margin upside" in Q1, the report said.
First Advantage's "transaction-based revenue model makes it sensitive to hiring trends" amid prospects of macro and geopolitical uncertainty," RBC said.
High leverage from the Sterling deal added volatility to First Advantage's shares, the note said.
RBC downgraded First Advantage stock to sector perform from outperform with a $20 price target.
First Advantage shares fell 1.6% in recent Friday trading.
Price: 17.54, Change: -0.29, Percent Change: -1.63
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.