William Blair initiated research coverage of HireRight Holdings Corp. (HRT $17.35), a leading global provider of technology-enabled background screening products.
Analyst Andrew Nicholas estimated that HireRight would generate adjusted EPS of $0.21 in 2021 and $0.69 in 2022, or $1.00 and $1.29, respectively, excluding amortization of acquired intangibles.
“HireRight should benefit from a sizable addressable market (we estimate the core background screening market to be roughly $4 billion-$6 billion) growing solidly in the mid- to upper single digits,” Nicholas said. “Market growth is enhanced by several secular trends, including: 1) increasing hiring and job turnover, 2) growth in the gig economy, 3) increased frequency of background screens, and 4) heightened regulation and compliance scrutiny tied to hiring practices.”
He added, “As the largest player in the industry by revenue, we believe HireRight’s scale provides a material competitive advantage over midsize and small players, including global geographic reach, greater resources and ability to invest in product and technology upgrades, a more robust customer support organization, and increased operating leverage and profitability. We therefore expect HireRight to take market share (primarily from midsize and small players) and outgrow the overall market.”
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Current Ratings Distribution (as of 11/22/21)
Outperform (Buy): 76%
Market Perform (Hold): 24%
Underperform (Sell): 1%
Inv. Banking Relationships*
Outperform (Buy): 32%
Market Perform (Hold): 12%
Underperform (Sell): 0%
* Percentage of companies in each rating category that are investment banking clients, defined as companies for which William Blair has received compensation for investment banking services within the past 12 months.
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