After a challenging period for its shares, background screening specialist First Advantage appears to be at an inflection point. Two significant recent developments suggest a fundamental reassessment of the company’s market potential is underway, generating fresh momentum for the equity.
Strong Quarterly Performance Underpins Optimism
The foundation for this renewed confidence was established in early August when First Advantage reported impressive second-quarter results for fiscal 2025. The company posted earnings per share (EPS) of $0.27, surpassing analyst expectations by a significant 12.5%. More strikingly, revenue demonstrated explosive growth, surging 111.7% year-over-year. These robust figures highlight the successful integration of the Sterling Check Corp. acquisition and point to strong operational execution by the management team.
Zacks Issues Strong Buy Recommendation
This powerful fundamental performance triggered a notable reaction from the analyst community. Research firm Zacks upgraded its rating on First Advantage shares from “Hold” to “Strong Buy” this Thursday. This substantial upgrade represents a clear conviction in the stock’s potential for future outperformance, directly stemming from the company’s recent financial achievements.
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Major Institutional Investor Significantly Increases Stake
Adding considerable weight to this bullish outlook, Petrus Trust Company executed a major increase in its position. The institutional investor boosted its stake in First Advantage by a substantial 124.5%. This move brings the total value of its holdings to over half a million dollars, serving as a powerful endorsement of the company’s underlying strength and future prospects from the sophisticated investor class.
Upcoming Conference Could Provide Further Catalyst
The positive momentum may gather additional steam this Wednesday when the company’s leadership presents at the Barclays Financial Services Conference. The investment community will be watching for deeper insights into First Advantage’s strategic direction and growth initiatives.
With a consensus price target of $20.25, analysts currently see approximately 26% upside potential. However, given the powerful combination of stellar earnings, a major analyst upgrade, and a decisive vote of confidence from a large institution, some market observers are questioning whether this target might still be too conservative.
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