FICO
FICO
$932.26
-16.68%
Fair Isaac Corporation (FICO) is a leading applied analytics company, best known for its FICO credit scores, which serve as a widely used industry benchmark for assessing consumer creditworthiness. The company also sells software to financial institutions for analytics, decision-making, customer workflows, and fraud detection. FICO holds a dominant position in the credit scoring market, with its scores deeply embedded in U.S. lending decisions. Currently, the stock is under pressure, with a significant decline from its 52-week high, as investors debate the sustainability of its growth amid macroeconomic headwinds and the potential impact of AI-driven competitors.…
FICO
FICO
$932.26
Related headlines
Investment Opinion: Should I buy FICO Today?
We rate FICO as a Buy, driven by its exceptional growth, profitability, and dominant market position, despite the recent stock decline. The analyst consensus is Buy with an average target price of $1,476.32, implying 28% upside. The thesis is that FICO's strong fundamentals will eventually be recognized by the market, leading to a recovery.
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FICO 12-Month Price Forecast
The AI assessment is bullish, as FICO's fundamentals are strong and the stock appears undervalued on a forward basis. The recent decline provides a buying opportunity for long-term investors. However, the high trailing PE and competitive threats warrant caution. If the company can sustain its growth and fend off AI competitors, the stock has significant upside. I would upgrade to a more bullish stance if revenue growth accelerates above 40% or if the stock drops to a forward PE below 15x. Conversely, a downgrade would occur if growth slows below 20% or if the company loses market share.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on FICO's 12-month outlook, with a consensus price target around $1463.84 and implied upside of +57.0% versus the current price.
Average Target
$1463.84
0 analysts
Implied Upside
+57.0%
vs. current price
Analyst Count
—
covering this stock
Price Range
$696 - $1750
Analyst target range
FICO is covered by 19 analysts, with a consensus recommendation of 'Buy' and a mean rating of 1.90 (where 1 is Strong Buy and 5 is Sell). The average target price is $1,476.32, implying an upside of approximately 28% from the current price of $1,153.57. The target range is wide, from a low of $707.00 to a high of $1,750.00, indicating significant uncertainty. The high target suggests that some analysts see substantial upside, possibly driven by continued growth in the Scores segment and AI-driven analytics. The low target may reflect concerns about competitive pressures or macroeconomic headwinds. Recent ratings from firms like UBS (Neutral) and Needham (Buy) show a mix of sentiment, but the overall consensus remains bullish.
Bulls vs Bears: FICO Investment Factors
FICO presents a classic growth-at-a-reasonable-price dilemma. The company's fundamentals are exceptional, with 38.7% revenue growth, 86.8% gross margins, and robust free cash flow, underpinned by a dominant market position. However, the stock has been punished severely, down 23.4% over the past year, due to valuation concerns and fears of AI disruption. The bull case rests on continued strong execution and the durability of its credit scoring moat, while the bear case hinges on valuation compression and competitive threats. Currently, the evidence slightly favors the bulls given the strong fundamentals and analyst consensus, but the high valuation and negative equity warrant caution. The key tension is whether FICO can sustain its growth trajectory to justify its premium multiple, or if the market's pessimism is warranted.
Bullish
- Explosive Revenue Growth: Q2 2026 revenue surged 38.7% YoY to $691.7M, accelerating from prior quarters. This growth is driven by both Scores and Applications segments, indicating broad-based demand for FICO's analytics and decisioning software.
- Exceptional Profitability: Gross margin expanded to 86.8% in Q2 2026, with operating margin at 58.2% and net margin at 38.2%. This demonstrates a highly scalable business model with strong pricing power and efficient cost management.
- Dominant Market Position: FICO scores are the industry standard for U.S. consumer creditworthiness, deeply embedded in lending decisions. This creates a durable competitive moat and recurring revenue stream that is difficult for competitors to displace.
- Strong Free Cash Flow: Trailing twelve-month free cash flow stands at $892.7M, providing ample liquidity for debt reduction, buybacks, or strategic investments. This cash generation supports the company's ability to navigate economic downturns.
Bearish
- Severe Stock Price Decline: FICO's stock has dropped 23.4% over the past year and is down 29.8% YTD, significantly underperforming the S&P 500 (which gained 18.6% over the same period). This reflects investor concerns about valuation and growth sustainability.
- High Valuation Premium: Trailing PE of 55.6x is well above the market average, and even the forward PE of 21.7x implies high growth expectations. If growth decelerates, the stock could face multiple compression, leading to further downside.
- Negative Shareholders' Equity: Debt-to-equity ratio of -1.76 indicates negative equity, a result of aggressive share buybacks. This financial structure increases risk, as the company has no equity cushion to absorb losses, and interest expenses are rising (Q2 interest expense of $44.6M).
- Liquidity Concerns: Current ratio of 0.83 suggests potential short-term liquidity issues, as current liabilities exceed current assets. While FICO generates strong cash flow, this could be a red flag if cash flow weakens.
FICO Technical Analysis
FICO's stock has been in a pronounced downtrend over the past year, with a 1-year price change of -23.42%. The current price of $1,153.57 sits at approximately 24.5% of its 52-week range (between $870.01 low and $1,998.01 high), indicating the stock is trading near the lower end of its range. This positioning suggests a bearish sentiment, with the stock having lost significant ground from its highs, potentially presenting a value opportunity or signaling further downside risk depending on fundamental support.
Beta
1.32
1.32x market volatility
Max Drawdown
-50.9%
Largest decline past year
52-Week Range
$870-$1998
Price range past year
Annual Return
-38.6%
Cumulative gain past year
| Period | FICO Return | S&P 500 |
|---|---|---|
| 1m | -14.6% | +0.1% |
| 3m | -18.0% | +4.4% |
| 6m | -36.8% | +14.6% |
| 1y | -38.6% | +18.6% |
| ytd | -43.3% | +12.9% |
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FICO Fundamental Analysis
FICO's revenue growth has been robust, with the most recent quarter (Q2 2026) showing revenue of $691.7 million, a 38.69% YoY increase. This growth is accelerating, as prior quarters showed sequential increases from $439.97 million in Q1 2025 to $511.96 million in Q1 2026. The growth is driven by both the Scores segment ($474.97 million) and Applications segment ($216.70 million), with Scores being the primary driver. The company's net income for the quarter was $264.46 million, with a net margin of 38.23%, reflecting strong profitability. Gross margin stood at 86.81%, indicating a highly scalable business model. Operating margin was 58.19%, showcasing efficient cost management. FICO's balance sheet shows a debt-to-equity ratio of -1.76, which is negative due to negative shareholders' equity, a common situation for companies with significant buybacks. The current ratio is 0.83, indicating potential liquidity concerns, but free cash flow for the trailing twelve months is $892.69 million, providing ample cash generation. The company's ROE is negative at -37.34%, but this is distorted by the negative equity base. Overall, FICO's fundamentals remain strong, with high margins and robust cash flow, but the negative equity and high debt levels warrant monitoring.
Quarterly Revenue
$691677000.0B
2026-03
Revenue YoY Growth
+38.7%
YoY Comparison
Gross Margin
86.8%
Latest Quarter
Free Cash Flow
$892685000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is FICO Overvalued?
Given that FICO has positive net income, the PE ratio is the appropriate valuation metric. The trailing PE is 55.63x, while the forward PE is 21.70x, indicating that the market expects significant earnings growth. This gap suggests that the market is pricing in a substantial increase in earnings, which is supported by the company's recent growth trajectory. Compared to the industry average, FICO's PE is at a premium, but this is justified by its superior margins and growth. Historically, FICO's PE has ranged from around 23x to 88x over the past few years, with the current trailing PE of 55.63x near the higher end, but the forward PE of 21.70x is near the lower end, suggesting that the stock may be undervalued relative to its earnings potential.
PE
55.6x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 24x~88x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
41.2x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks: FICO's balance sheet is a concern, with a debt-to-equity ratio of -1.76 due to negative shareholders' equity from aggressive buybacks. This means the company has no equity buffer, and rising interest expenses (Q2: $44.6M) could pressure earnings if rates stay high. The current ratio of 0.83 indicates potential liquidity stress, though strong free cash flow of $892.7M provides some cushion. Revenue concentration in the Scores segment (68.7% of Q2 revenue) exposes the company to any regulatory or competitive changes in credit scoring. Additionally, the high net margin of 38.2% could be vulnerable to increased competition or pricing pressure.