FICO: Mortgage Score Headwinds Will Ultimately Support Future Upside Potential

Analysts have trimmed the Fair Isaac price target by about $40 to roughly $1,512, as they factor in softer mortgage score trends, pending Direct Licensing Program approvals, and a lower assumed future P/E multiple.

Analyst Commentary

Recent Street research on Fair Isaac highlights a split view on the stock, with some bullish analysts focusing on execution in software and earnings delivery, while more cautious analysts focus on mortgage credit trends, valuation, and regulatory timing for key programs.

Bullish Takeaways

• Bullish analysts point to Fair Isaac delivering an earnings per share result of US$12.18 versus a Street figure of US$11.95, even with revenue modestly below expectations, as evidence of solid margin execution and cost control.
• Some research points to higher than previously expected software revenue, which supports the view that the software segment can help underpin growth even when score related revenue faces headwinds.
• Several firms have raised price targets into a band around US$1,250 to US$1,639, which indicates confidence that the stock can support a higher valuation as Fair Isaac executes on its software and scoring strategy.
• Bullish analysts also note that full year guidance has been raised, which they see as a sign of management confidence, even though guidance still sits below Street estimates.

Bearish Takeaways

• Bearish analysts highlight the sequential decline in mortgage score revenues as a risk to Fair Isaac, since this can weigh on growth for the scores business and pressure the valuation multiple.
• Rapid VS4 share gains in conforming mortgages at large lenders are seen as a competitive concern, suggesting Fair Isaac may face more pressure in mortgage related scoring over time if that trend continues.
• The pending Direct Licensing Program approval is viewed as a key uncertainty. The program is still awaiting final GSE approval, which introduces timing risk for when that revenue stream can fully contribute.
• Some analysts have trimmed price targets, including a cut from US$2,400 to around US$1,525 and reductions into the US$1,400 area, which reflects caution on how current execution and score trends support prior valuation levels.

What’s in the News for Fair Isaac

• Fair Isaac reported third quarter fiscal 2026 earnings of US$10.45 per share, with revenues in both the Scores and Software segments described as strong, and raised full year guidance for 2026. Source: FICO earnings release and guidance update.
• Adoption of FICO Score 10T has moved past 70 mortgage lenders, supported by the FICO Score 10T Free Access Program that offers the score alongside Classic FICO at no additional fee to lower adoption barriers. Source: company announcement on FICO Score 10T adoption.
• Fannie Mae and Freddie Mac released expanded historical datasets for FICO Score 10T covering loan level performance data from April 2013 through September 2025, which gives mortgage lenders and investors more real world data for evaluating this score. Source: FICO product related announcement.
• Optimal Blue integrated FICO Score 10T into its capital markets and product pricing platform, allowing lenders to use the score across pricing, eligibility, hedging, trading, and loan portfolio valuation throughout the mortgage lifecycle. Sources: company announcement and related news coverage.
• Fair Isaac announced a share repurchase program authorized by its Board on June 8, 2026, with plans to buy back up to US$2.0b of outstanding common stock. Source: company buyback announcement.

Valuation Changes for Fair Isaac

• Fair Value has been reduced slightly from $1,552.52 to $1,512.25, reflecting a more cautious central estimate for Fair Isaac.
• Discount Rate has risen slightly from 8.82% to 9.06%, which implies a modestly higher required return on Fair Isaac in the updated assumptions.
• Revenue Growth has been trimmed from 15.43% to 13.80%, pointing to a more moderate expectation for future $ revenue expansion.
• Profit Margin has been eased back from 40.11% to 38.34%, indicating slightly lower projected $ earnings as a share of sales in the model.
• Future P/E has been cut from 28.75x to 24.65x, which reduces the valuation multiple applied to Fair Isaac in the updated framework.