Needham sees bright growth prospects for background screening firms

First Advantage

21/09/2022 11:10

** Needham says it is optimistic about the market growth
opportunity for background screening services and initiates
coverage on three firms Sterling Check Corp  STER.O , HireRight
Holdings Corp  HRT.N  and First Advantage Corp  FA.O 
    ** "We view background screening as a large and growing
global market that has room for multiple winners" says Needham 
    ** Brokerage starts coverage of HRT with a "buy" rating and
a $22 price target; optimistic of co's automation/ digital
transformation program and says it could boost margins in FY24  
 
    ** Needham views STER's focus on identity verification as
its biggest strength and also believes co has an edge over peers
as it is the only one operating fully within the cloud; starts
coverage with "buy" rating and a $27 PT
    ** Needham highlights FA has the highest margins among the
three companies, given its focus on artificial intelligence and
building a proprietary criminal data-base
    ** However, Needham starts coverage of the firm with "hold";
says it is concerned about macro backdrop and adds that there
could have been some pull-forward in co's growth following
impressive results over the last few years 
 

 (Reporting by Johann M Cherian in Bengaluru)
 ((johann.mcherian@thomsonreuters.com;))