FICO
FICO
$922.37
-13.99%
Fair Isaac Corporation (FICO) is a leading applied analytics company operating in the Software - Application industry, primarily known for its ubiquitous FICO credit scores which serve as a benchmark for consumer creditworthiness. The company holds a dominant, entrenched market position as the standard-setter in credit scoring, with its US-centric scores business generating the majority of its revenue and profits, supplemented by software offerings for financial institutions in analytics, decision-making, and fraud. The current investor narrative is dominated by a significant and severe stock price decline, raising questions about the durability of its core franchise, potential competitive threats from AI-driven lending platforms, and whether the sell-off represents a structural challenge or a deep value opportunity given its still-robust underlying financials.…
FICO
FICO
$922.37
Related headlines
FICO 12-Month Price Forecast
Wall Street consensus
Most Wall Street analysts maintain a constructive view on FICO's 12-month outlook, with a consensus price target around $1199.08 and implied upside of +30.0% versus the current price.
Average Target
$1199.08
6 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
6
covering this stock
Price Range
$738 - $1199
Analyst target range
Analyst coverage is limited with only 6 analysts providing estimates, indicating this is a specialized name with less broad institutional following, which can contribute to higher volatility. The consensus sentiment, based on recent institutional ratings, leans bullish with firms like Baird (Outperform), Wells Fargo (Overweight), Goldman Sachs (Buy), Needham (Buy), and Jefferies (Buy) maintaining positive ratings, while JP Morgan and UBS are Neutral; there have been no recent downgrades, suggesting analysts view the sell-off as overdone relative to fundamentals. The average revenue estimate for the coming year is $3.80 billion, with a high of $4.08 billion and a low of $3.60 billion, representing a wide range that reflects uncertainty around growth trajectories, while the average EPS estimate is $75.54, ranging from $70.23 to $82.81. The wide target price range, implied by the EPS range, signals high uncertainty about the company's near-term prospects, with the high target likely assuming multiple expansion and a return to accelerated growth, while the low target likely factors in further margin compression or competitive erosion.
Bulls vs Bears: FICO Investment Factors
The investment debate for FICO centers on a stark conflict between deteriorating price momentum and still-robust underlying fundamentals. The bear side currently has stronger near-term evidence, driven by a severe technical breakdown, decelerating growth, and emerging competitive threats. However, the bull case is supported by exceptional profitability, a dominant market position, and a forward valuation that appears reasonable. The single most important tension is whether the stock's 42% decline is a rational repricing of overvaluation and growth risks, or an overreaction that creates a deep value opportunity in a high-quality franchise. The resolution hinges on whether revenue growth stabilizes or continues to decelerate in the face of potential AI-driven competition.
Bullish
- Exceptional Profitability & Margins: FICO maintains an exceptionally high gross margin of 82.96% and a net margin of 30.9% as of Q1 2026, far exceeding typical software peers. This demonstrates the asset-light, high-margin nature of its analytics and credit scoring franchise, providing a robust financial foundation despite the stock's decline.
- Strong Forward P/E Valuation: The forward P/E of 20.46x, based on consensus EPS of $75.54, is significantly lower than the trailing P/E of 55.64x and suggests the market is pricing in a substantial earnings recovery. This forward multiple is more reasonable for a company with FICO's growth and profitability profile, indicating potential value.
- Dominant, Entrenched Market Position: FICO's credit scores remain the industry standard for consumer creditworthiness, with the US-centric Scores business generating the majority of revenue and profits. This entrenched position creates significant switching costs and a durable competitive moat, which is not easily disrupted.
- Robust Revenue Growth & Cash Flow: Q1 2026 revenue grew 16.36% YoY to $512 million, and the company generated $735.1 million in TTM free cash flow. This consistent top-line growth and strong cash generation provide ample liquidity for debt service and capital returns, supporting financial flexibility.
Bearish
- Severe Technical Downtrend & High Volatility: The stock is down 42.34% over the past year and 41.11% over six months, trading near its 52-week low with a beta of 1.376. This indicates sustained, accelerating selling pressure and high volatility, posing significant near-term risk for investors despite potential long-term value.
- Revenue Growth Deceleration: While still positive, Q1 2026 revenue growth of 16.36% YoY represents a deceleration from the 19.8% YoY growth seen in Q3 2025. This slowdown raises concerns about the sustainability of the company's growth trajectory and its ability to meet elevated market expectations.
- Elevated Trailing Valuation & Negative Equity: A trailing P/E of 55.64x is at a significant premium to the software industry, and the debt-to-equity ratio is -1.76 due to aggressive share buybacks. This combination suggests the stock was previously overvalued and the balance sheet is leveraged, increasing financial risk.
- Competitive Threat from AI Lending: Recent news highlights institutional investment in AI-driven lending platforms like Upstart, which directly challenge FICO's core credit scoring model. This represents a potential long-term structural threat to FICO's dominant franchise, even if near-term disruption is limited.
FICO Technical Analysis
The stock is in a pronounced and severe downtrend, with a 1-year price change of -42.34% and a 6-month decline of -41.11%, indicating sustained and accelerating selling pressure. As of the latest close of $1089.76, the price is trading near the bottom of its 52-week range, approximately 9.5% above the 52-week low of $969.32 and 50.9% below the high of $2217.6, positioning it as a potential value opportunity but with significant risk of further downside if the fundamental story deteriorates. Recent momentum shows extreme weakness, with a 1-month decline of -24.74% and a 3-month drop of -33.68%, both far exceeding the broader market's performance (SPY down -4.28% and -4.0% respectively), confirming the downtrend is accelerating and not showing signs of stabilization or reversal. The stock exhibits high volatility with a beta of 1.376, meaning it is approximately 38% more volatile than the market, which is critical for risk management, especially during this period of extreme price discovery and negative sentiment. Key technical support is at the 52-week low of $969.32, while resistance lies at the recent breakdown level around $1400-$1500; a decisive break below support could trigger another leg down, whereas a recovery above $1500 might signal a tentative stabilization, but the path of least resistance remains lower given the powerful negative momentum.
Beta
1.38
1.38x market volatility
Max Drawdown
-58.2%
Largest decline past year
52-Week Range
$909-$2218
Price range past year
Annual Return
-50.1%
Cumulative gain past year
| Period | FICO Return | S&P 500 |
|---|---|---|
| 1m | -20.8% | +0.5% |
| 3m | -44.6% | -2.1% |
| 6m | -44.6% | +4.0% |
| 1y | -50.1% | +29.5% |
| ytd | -43.9% | -0.4% |
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FICO Fundamental Analysis
Revenue growth remains solid but has decelerated from recent peaks; the most recent quarterly revenue (Q1 2026) was $511.96 million, representing a year-over-year growth of 16.36%, though this is a slowdown from the 20%+ YoY growth seen in prior quarters like Q3 2025 ($536.4 million, up 19.8% YoY). Segment data shows the core 'Scores' business generated $304.5 million and 'Applications' contributed $207.4 million in the latest period, with both segments likely contributing to growth, though the pace has moderated. The company is highly profitable with strong and stable margins; Q1 2026 net income was $158.37 million, translating to a net margin of 30.9%, while the gross margin was an exceptional 82.96%, demonstrating the high-margin, asset-light nature of its analytics and software business. Operating margins have been consistently robust, with the Q1 2026 operating margin at 45.7%, showing only slight compression from the 48.9% in Q3 2025, indicating disciplined cost control despite the top-line deceleration. The balance sheet shows a negative shareholder equity position (debt-to-equity of -1.76) due to significant share buybacks, but the company generates substantial free cash flow, with TTM free cash flow of $735.1 million, providing ample liquidity to service debt and continue capital returns. The current ratio of 0.83 indicates potential short-term liquidity pressure, but the strong and consistent cash generation from operations ($174.1 million in Q1 2026) mitigates near-term solvency risks, supporting financial flexibility.
Quarterly Revenue
$511959000.0B
2025-12
Revenue YoY Growth
+0.16%
YoY Comparison
Gross Margin
+0.82%
Latest Quarter
Free Cash Flow
$735084000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is FICO Overvalued?
Given the positive net income, the primary valuation metric is the P/E ratio. The trailing P/E is 55.64x, while the forward P/E is significantly lower at 20.46x, indicating the market expects a substantial recovery in earnings growth, with the forward multiple pricing in the analyst consensus EPS estimate of $75.54 for the coming year. Compared to the Software industry, a trailing P/E of 55.6x is at a significant premium, though this must be contextualized by FICO's exceptionally high net margins of 32.7% and gross margins of 82.2%, which are superior to typical software peers and may justify a higher multiple for its quality and profitability. Historically, the stock's own trailing P/E has fluctuated widely; the current 55.6x is below the recent peak of 79.6x seen in Q1 2025 but above the low of 23.8x from mid-2021, suggesting the valuation has compressed from optimistic levels but remains elevated relative to its own history, implying the market is still pricing in a premium for its franchise strength despite the severe price correction.
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 faces financial risks from its negative shareholder equity position (debt-to-equity of -1.76) resulting from significant share buybacks, which increases leverage. While strong free cash flow of $735.1M TTM mitigates solvency risk, the current ratio of 0.83 indicates potential short-term liquidity pressure. Furthermore, revenue growth deceleration from over 19% to 16.36% YoY introduces earnings volatility risk, as the market's forward P/E of 20.46x is predicated on a sustained earnings recovery. Any further slowdown could trigger multiple compression.
Market & Competitive Risks: The primary market risk is valuation compression, as the stock's trailing P/E of 55.64x remains at a premium to the software industry despite the severe price decline. The stock's high beta of 1.376 makes it 38% more volatile than the market, amplifying downside during sector rotations or growth stock sell-offs. The most significant external threat is competitive disruption from AI-driven lending platforms like Upstart, as highlighted by recent institutional investment news. This challenges FICO's core credit scoring monopoly and could erode its long-term pricing power and growth.
Worst-Case Scenario: The worst-case scenario involves a combination of accelerated revenue deceleration below 10%, margin compression from competitive or inflationary pressures, and a loss of investor confidence triggering a liquidity crisis. This could lead to a break below the key technical support at the 52-week low of $969.32, revisiting the stock's historical max drawdown of -54.9%. From the current price of ~$1089, this implies a realistic downside of approximately -11% to the 52-week low, with potential for a further decline to the $800-$900 range if the fundamental story deteriorates severely, representing a total loss of 25-35%.