First Advantage Corp (FA.N): Model/TP Update: Strong Execution, Sequencing Keeps Us on the Sidelines; TP to $22

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14 Aug 2026 16:00:00 ET │ 14 pages

First Advantage Corp (FA.N)

Model/TP Update: Strong Execution, Sequencing Keeps Us on the

Sidelines; TP to $22

CITI'S TAKE

We update our model following First Advantage's 2Q’26 earnings, which

represented a material beat and outlook refining. Our revised estimates flow

through strong 1H’26 execution, continued Sterling synergy progress, and

management's updated full-year outlook, while we apply a degree of

conservatism to 2H’26 given tougher comps against an exceptional 2H’25.

We raise our TP from $18 to $22 and maintain our Neutral/HR rating. The

higher TP reflects rolling our valuation to a higher multiple on FY'27

estimates (from 8x-10x to 11x-13x FY’27 adj. EBITDA), consistent with

improved earnings quality and synergy visibility. Being more constructive

here would require greater confidence that second-half execution can

sustain above-algorithm growth through the comp headwind, or a material

acceleration in Digital Identity and monitoring revenue contribution that

rerates the market's view of FA's long-term margin trajectory, in our view.

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Our thinking on 2H’26 — The core thesis remains intact: The company continues to

demonstrate that its combined platform is a structurally more powerful

compounder than the market has historically credited. Enterprise bookings

momentum is strong, Digital Identity is becoming a genuine deal driver rather than

a bundled add-on, and base growth has durably inflected positive for two

consecutive quarters. Meanwhile, the balance sheet trajectory remains firmly in the

right direction. In our thinking, the challenge is less about the business and more

about sequencing. 2H’26 growth rates will moderate materially as the company laps

the large 2025 go-lives, and the episodic customer volume tailwind that contributed

to 2Q’26 outperformance is expected to normalize into year-end. This mechanical

step-down limits near-term upward estimate revision momentum and keeps

sentiment-driven multiple expansion constrained, in our view.

Price Performance

(RIC: FA.N, BB: FA US)

Neutral / High Risk

Price (14 Aug 26 12:00)

US$21.64

Target price

US$22.00↑

from US$18.00

Expected share price return

1.7%

…