Stock of the Day

September 2, 2020

First American Financial (FAF)

$73.07
+$1.06 (+1.5%)
Market Cap: $7.34B

About First American Financial

First American Financial Corporation, through its subsidiaries, provides financial services. It operates through Title Insurance and Services, and Home Warranty segments. The Title Insurance and Services segment issues title insurance policies on residential and commercial property, as well as offers related products and services internationally. This segment also provides closing and/or escrow services; products, services, and solutions to mitigate risk or otherwise facilitate real estate transactions; and appraisals and other valuation-related products and services, lien release and document custodial services, warehouse lending services, default-related products and services, document generation services, mortgage loans subservicing, and related products and services, as well as banking, trust, and wealth management services. In addition, it accommodates tax-deferred exchanges of real estate; and maintains, manages, and provides access to title plant data and records. This segment offers its products through a network of direct operations and agents in various states and in the District of Columbia, as well as in Canada, the United Kingdom, Australia, New Zealand, South Korea, and internationally. The Home Warranty segment provides home warranty products, including residential service contracts that cover residential systems, such as heating and air conditioning systems, and various appliances against failures that occur as the result of normal usage during the coverage period. This segment operates in various states and the District of Columbia. The company was founded in 1889 and is headquartered in Santa Ana, California.

Today's Trend

First American Financial Corporation (NYSE: FAF) is edging higher as investors digest a mix of analyst commentary, but the main takeaway is that sentiment has turned more cautious after a downgrade. Zacks Research cut its recommendation on FAF from strong-buy to hold and trimmed several earnings forecasts, including near-term estimates for FY2026, Q4 2026, and multiple 2027–2028 periods. Lower earnings expectations can pressure a stock because they suggest slower profit growth ahead.

  • Keefe, Bruyette & Woods still rates First American Financial as outperform, even though it lowered its price target to $84 from $87, suggesting analysts still see meaningful upside from current levels. Keefe, Bruyette & Woods price target cut
  • Zacks Research made only small changes to some longer-dated estimates, including a slight increase to Q2 2027 EPS and modest cuts to other future quarters, indicating no major thesis change beyond a more conservative outlook. Zacks Research earnings estimate changes
  • The company’s recent earnings results were solid, with EPS of $1.33 beating estimates and revenue topping expectations, which continues to provide some support for the stock.
  • Zacks Research downgraded First American Financial (NYSE: FAF) to hold and reduced earnings estimates across several periods, including FY2026, Q4 2026, FY2027, and FY2028, which is the clearest negative catalyst for the shares. Zacks Research downgrade

Overall, FAF appears to be benefiting from still-constructive long-term analyst targets and recent earnings strength, but the stock is facing headwinds from lower forward earnings estimates and a downgraded rating.

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