Analysts have raised their price target for Fair Isaac to $2,400 from $2,000. They cited stronger-than-expected revenue growth and optimism about the company’s new mortgage direct license program.

Analyst Commentary

Following the recent developments at Fair Isaac, analysts have provided a range of perspectives on the company’s future prospects and valuation. These views highlight the drivers behind recent price target increases as well as key uncertainties for investors to monitor.

• Bullish analysts highlight the consistent track record of mid-teens revenue growth and more than 20 percent bottom line growth, underpinned by the company’s strong pricing power.
• The launch of the new mortgage direct license program is widely seen as a positive catalyst. There are expectations that it could effectively double the price of mortgage transactions and unlock new revenue streams.
• Some believe recent share price weakness and multiple contraction now offer an attractive entry point for long-term investors, despite past controversy.
• High market share and industry standard status are cited as signs of the company’s defensible competitive position, even amid regulatory debates.

• Bearish analysts caution that recent gains since the launch of the Mortgage Direct License Program may reflect fully valued shares, with limited short-term upside.
• There is concern about regulatory uncertainty and the potential for increased competition or share loss to rivals, including alternative scoring models.
• Some warn that while new programs may provide revenue upside for Fair Isaac, the operational capacity of resellers and unknown responses from credit bureaus introduce execution risk.

What's in the News

• UBS raises its price target on FICO to $1,590 from $1,540, maintaining a Neutral rating on the shares (UBS).
• The FICO Score Mortgage Simulator is now available to mortgage professionals through Credit Interlink and partners. It allows real-time modeling of credit actions for more accurate lending decisions (FICO announcement).
• FICO launches the Mortgage Direct License Program, enabling tri-merge resellers to deliver FICO Scores directly to lenders and brokers. This reduces costs and increases transparency in the mortgage industry (FICO announcement).
• FICO receives 10 new patents in Responsible AI, advancing technologies in fraud detection, bias reduction, and data privacy. Its total portfolio now exceeds 200 patents (FICO announcement).
• FICO introduces the FICO Foundation Model for Financial Services, a domain-specific generative AI platform designed to improve accuracy and reduce hallucinations for financial services applications (FICO announcement).

Valuation Changes

• The Fair Value Estimate remains unchanged at approximately $2,017.
• The Discount Rate has decreased slightly, moving from 8.64 percent to 8.62 percent.
• The Revenue Growth projection has risen marginally, from 18.39 percent to 18.47 percent.
• The Net Profit Margin expectation has declined, falling from 39.99 percent to 38.43 percent.
• The Future P/E ratio has increased modestly, rising from 44.44x to 46.13x.