We use a combination of EV/EBITDA and DCF to arrive at our $16 target price. We base our $16 TP on our targeted 11x-13x EV/EBITDA multiple range versus our FY’26 estimates (previously FY'25), equating to a 16x-19x P/E and a 3-5% FCF/EV yield (5.5%-7.5% FCF/Equity yield). We set our target multiple range to equate to a ~10-15% discount vs our DCF output, which factors cyclical growth, gradual margin progression, and an onerous ~9-10% WACC to account for the company's "leading cyclical" exposure given the current decelerating hiring environment.

We rate FA High Risk given the leading cyclical nature of the employment pre-screening business. We note the following upside and downside risks to shares achieving our target price:
• Economic Sensitivity – Employment is reflective of economic activity. So periods of weak/strong economic growth could affect hiring trends broadly.
• PE Sponsor Overhang – The stock’s PE sponsor owns a considerable stake in the company. Future increases in public float may induce periods of volatility.
• Regulatory Risks – Regulatory changes could have an outsized impact.
• Security – Data breaches are always a risk to consider for processors and companies that store and transmit sensitive information.
If any of these risk factors has a greater downside impact than we anticipate, the share price may not achieve our price target.