Could FICO’s Direct Access Program Reshape Equifax’s (EFX) Competitive Edge in Mortgages?

• In recent days, Fair Isaac Corporation (FICO) announced a new program that allows mortgage lenders and resellers to access FICO credit scores directly, effectively bypassing Equifax and other major credit bureaus in the mortgage process. This move introduces a significant shift in the credit score distribution model and could reshape long-standing revenue sources for Equifax.
• By disrupting the traditional credit bureau intermediary role and offering lenders direct access to FICO scores at lower prices, FICO’s initiative raises fresh questions about Equifax’s competitive positioning within the mortgage market.
• We’ll examine how FICO’s direct-to-lender program could influence Equifax’s investment narrative, particularly given its potential to reduce bureau-driven mortgage revenue streams.

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Equifax Investment Narrative Recap

To own Equifax stock, you need confidence in its ability to deliver earnings growth through data innovation and international expansion, despite competitive and legal headwinds. FICO’s direct-to-lender program meaningfully threatens Equifax’s near-term mortgage revenue, a key catalyst, shifting the biggest immediate risk from legal costs to intensified market competition in credit scoring.

Among Equifax’s recent announcements, the launch of its Identity Proofing module in Kount 360 stands out, as it addresses fraud and security, areas increasingly vital amid shifting competitive threats and ongoing industry disruption. While incremental innovation remains a catalyst, events like FICO’s program underscore how quickly competitive risks can alter the financial outlook.

By contrast, investors should be aware that competitive disruption in mortgage credit reporting may pose risks to margins that...

Read the full narrative on Equifax (it's free!)

Equifax's narrative projects $7.8 billion in revenue and $1.3 billion in earnings by 2028. This requires 9.9% yearly revenue growth and an earnings increase of $660 million from today’s $639.7 million.

Uncover how Equifax's forecasts yield a $280.50 fair value, a 19% upside to its current price.

Exploring Other Perspectives

Five fair value estimates from the Simply Wall St Community range from US$256.57 to US$369.61. With market risks for revenue compression amid competitive changes, investor opinions differ widely, explore several points of view.

Explore 5 other fair value estimates on Equifax - why the stock might be worth just $256.57!

Build Your Own Equifax Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Equifax research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.
• Our free Equifax research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Equifax's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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