RBC downgrades First Advantage on potential slowdown in hiring

RBC Capital analyst Ashish Sabadra downgraded First Advantage (FA) to Sector Perform from Outperform with an unchanged price target of $20. First Advantage’s Q1 results beat expectations as hiring growth was better than feared and the company continues to make progress on new wins and cross-sell, the analyst tells investors in a research note. The firm says that although First Advantage should benefit from Sterling revenue synergies and hiring trends remain stable, it is concerned about a potential slowdown in hiring as macro conditions soften. Furthermore, the high leverage from the Sterling acquisition adds volatility to the stock, adds RBC. As such, it sees a balanced risk/reward post the 19% rally on the earnings report.