FICO
FICO
$771.19
+0.16%
Fair Isaac Corporation (FICO) is an applied analytics company whose core asset is the FICO credit score, the de facto industry benchmark used by US lenders to price and underwrite consumer credit, supplemented by a decisioning software business sold to banks for analytics, workflow, fraud detection, and customer management. The company operates as a high-margin, near-monopoly standard-setter in consumer credit scoring rather than a conventional software vendor, with its Scores segment functioning as a royalty-like B2B toll road on US mortgage and card origination volumes while Applications provides a slower-growth but strategically sticky enterprise software franchise. The current investor narrative has turned sharply negative: headlines through late September 2026 flag regulatory risk hitting FICO, and the stock has suffered a violent de-rating amid concerns over pricing power, mortgage-volume sensitivity, and potential competitive or regulatory encroachment on its score franchise. That debate now centers on whether the selloff is an overreaction to a policy headline or the beginning of structural erosion in FICO's pricing umbrella, with the upcoming earnings cycle and any regulatory developments as the key swing factors.…
FICO
FICO
$771.19
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 $1031.89 and implied upside of +33.8% versus the current price.
Average Target
$1031.89
0 analysts
Implied Upside
+33.8%
vs. current price
Analyst Count
—
covering this stock
Price Range
$490 - $1675
Analyst target range
Coverage is solid, with 19 analysts and a consensus recommendation of "buy" (mean rating 2.29 on a scale where lower is more bullish), and an average target price of $1,031.89 — implying roughly +33.8% upside from the current $771.19. The consensus therefore leans bullish and stands in stark contrast to the price action, which is typical of a sharp policy-driven selloff where sell-side models lag the tape; the estimated average EPS of $62.78 and average revenue of $3.06 billion underpin that constructive stance. Notably, the most recent institutional actions show maintenance rather than capitulation — Wells Fargo reiterated Overweight on September 22, 2026, and Barclays reiterated Overweight on August 10, 2026 — though Wolfe Research downgraded to Peer Perform from Outperform on August 3, 2026, the one clear negative revision in the dataset.
The target range is extremely wide, from a low of $490 to a high of $1,675 — a 3.4x spread that signals very high uncertainty and weak conviction rather than a tight clustering of views. The high target of $1,675 implies multiple re-expansion toward prior premium levels and confidence that the regulatory overhang is transient and Scores pricing holds; the low target of $490 prices in margin compression, adverse regulation, or a mortgage-volume downturn that erodes the royalty base. With the stock at $771.19, the low target implies about -36.5% downside and the high about +117% upside, so the distribution is wide and bimodal — this is a binary regulatory outcome trade, and the 3.11 short ratio plus 1.341 beta mean the path between those targets is likely to remain volatile.
Bulls vs Bears: FICO Investment Factors
The evidence is genuinely split, but the bear case currently carries more weight because the single largest swing factor — regulatory action against FICO's Scores pricing — is unresolved and directly threatens the ~two-thirds of revenue that generates the company's extraordinary margins. The bull case rests on hard reported numbers: 25.68% revenue growth, 87.09% gross margin, 53.79% operating margin, and a forward PE of 15.55x that looks cheap if consensus EPS of $62.78 survives. The bear case rests on price action and policy risk: a -52.4% one-year decline, a -30% two-day gap, and a 3.4x-wide analyst target range that admits the outcome is binary. The most important tension is whether the September regulatory headline is a transient overhang or the start of structural erosion in FICO's pricing umbrella — if Scores pricing holds, the stock is deeply undervalued at 15.55x forward earnings; if it does not, the $490 low target becomes the anchor.
Bullish
- Revenue accelerating at 25.7% YoY: Fiscal Q3 2026 revenue of $674.19M rose 25.68% from $536.42M a year earlier, and the quarterly progression ($511.96M Q1, $691.68M Q2, $674.19M Q3) shows acceleration rather than decay. The fundamental business has not broken even as the stock halved.
- Elite margins still expanding: Gross margin rose to 87.09% from 83.67% a year ago and operating margin expanded to 53.79% from 48.94%, with operating income of $362.63M. Net income grew 30.5% YoY to $237.17M on a 35.18% net margin — this is a pricing-power business, not a deteriorating one.
- Forward PE of 15.6x vs 55.6x trailing: The 72% compression between trailing (55.63x) and forward (15.55x) earnings implies the market is pricing an earnings reset that has not appeared in reported results. If the $62.78 consensus EPS holds, the stock is priced like a value name, not a monopoly.
- Analyst consensus buy, +33.8% upside: 19 analysts carry a mean rating of 2.29 (buy) with an average target of $1,031.89 versus the $771.19 price. Wells Fargo (Sept 22) and Barclays (Aug 10) reiterated Overweight through the selloff, suggesting sell-side models see the regulatory shock as transient.
Bearish
- Regulatory shock drove a 30% gap-down: The stock collapsed from $840.89 on Sept 28 to $592.47 on Sept 30 — roughly -30% in two sessions — on headlines flagging regulatory risk to FICO. Because Scores is ~two-thirds of revenue ($458.90M of $674.19M), any policy action on score pricing strikes the core profit engine.
- -52.4% one-year decline, -68.5% drawdown: FICO has lost more than half its value in a year with relative strength of -67.93% versus SPY, confirming idiosyncratic deterioration rather than market weakness. At $771.19 it sits at only ~14.5% of its 52-week range ($586.05–$1,858.91).
- Valuation still rich on sales and EBITDA: Even after the crash, PS is 18.22x, EV/Sales 9.18x and EV/EBITDA 41.23x — far above typical mature application-software norms. Price-to-cash-flow of 46.58x leaves little cushion if cash flow disappoints.
- Negative equity and thin liquidity: Debt-to-equity of -1.76 and P/B of -20.78 reflect buyback-driven negative book value, while the current ratio of 0.83 and cash of just $248.44M mean financial flexibility depends on continued cash flow and debt markets.
FICO Technical Analysis
FICO is in a severe, sustained downtrend that has wiped out more than half its value over the past year, with a 1-year price change of -52.40% and a YTD decline of -53.07%. At the current price of $771.19, the stock sits at roughly 14.5% of its 52-week range (52-week low $586.05, high $1,858.91), meaning it is trading in the bottom sixth of its annual range — a positioning that historically signals either deep value or a falling knife, and given the -68.48% max drawdown, the burden of proof remains on the bulls to show stabilization. The stock is dramatically underperforming the market, with relative strength of -67.93% versus SPY over one year and -64.99% YTD, confirming this is idiosyncratic deterioration rather than broad market weakness.
Short-term momentum remains negative but is showing tentative signs of basing: the 1-month change is -22.21% and the 3-month change is -38.65%, both worse than the 6-month change of -28.16%, which tells us the selling accelerated into late September rather than decelerating. The most violent leg occurred between September 28 and September 30, when the stock collapsed from $840.89 to $592.47 in two sessions — a roughly 30% gap-down consistent with a regulatory or guidance shock — before rebounding to $771.19, a recovery of about 30% off that low. That V-shaped bounce, with the latest session up 0.16% on 766,965 shares, suggests capitulation-style volume and short covering, but the 1-month relative strength of -23.43% versus SPY confirms no genuine momentum reversal has yet been established.
Key technical levels are now well defined: support sits at the $586.05 52-week low, with the $592-$618 panic-low zone as the critical line in the sand — a breakdown below that would signal a fresh leg of distribution and open air beneath. Resistance is layered at $840-$880 (the pre-crash shelf) and then the $1,100-$1,200 area where the stock traded for most of August and September; reclaiming those levels would be required to call the downtrend broken, while the 52-week high of $1,858.91 is now a distant 141% above spot. With a beta of 1.341, FICO is roughly 34% more volatile than the market, and combined with a short ratio of 3.11 days-to-cover, position sizing should assume outsized gap risk in both directions around regulatory headlines and earnings.
Beta
1.34
1.34x market volatility
Max Drawdown
-68.5%
Largest decline past year
52-Week Range
$586-$1859
Price range past year
Annual Return
-52.4%
Cumulative gain past year
| Period | FICO Return | S&P 500 |
|---|---|---|
| 1m | -22.2% | +0.2% |
| 3m | -38.7% | +2.9% |
| 6m | -28.2% | +8.4% |
| 1y | -52.4% | +14.9% |
| ytd | -53.1% | +11.9% |
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FICO Fundamental Analysis
The revenue trajectory remains genuinely strong and is the central tension in the bear case: fiscal Q3 2026 (quarter ended June 30, 2026) revenue was $674.19 million, up 25.68% year-over-year, and the multi-quarter progression shows acceleration rather than decay — $511.96 million in Q1 2026, $691.68 million in Q2 2026, and $674.19 million in Q3 2026 versus $536.42 million in the year-ago Q3. Segment data shows Scores at $458.90 million and Applications at $215.29 million, meaning the high-margin Scores royalty business still drives roughly two-thirds of revenue and is the engine of growth, which is precisely why regulatory scrutiny of score pricing is such a potent threat to the investment case. The growth trend implies the fundamental business has not yet broken, and the gap between 25.68% revenue growth and a -52.40% one-year stock decline is the clearest statement that this is a multiple-and-policy de-rating, not an earnings collapse.
Profitability is elite: Q3 2026 net income was $237.17 million on a 35.18% net margin, gross margin was 87.09% (gross profit $587.17 million), and operating margin reached 53.79% with operating income of $362.63 million. Margins have expanded materially over the past year — gross margin moved from 83.67% in the year-ago Q3 to 87.09%, and operating margin from 48.94% to 53.79% — while net income rose from $181.79 million to $237.17 million, a 30.5% increase. The reported trailing net margin of 32.75% and operating margin of 46.45% confirm this is one of the highest-margin business models in software, and the negative ROE of -37.34% alongside a negative book value is an artifact of aggressive buybacks rather than operating weakness, a distinction investors must not misread.
Balance-sheet optics are distorted by capital return: debt-to-equity is -1.76 and P/B is -20.78 because sustained repurchases have pushed shareholders' equity negative, with $2.27 billion of stock repurchased in Q3 2026 alone and $1.93 billion of debt repaid in the same quarter. Cash generation remains robust — TTM free cash flow of $996.02 million, Q3 operating cash flow of $380.44 million against capex of just $0.86 million, and a 99.8% FCF conversion ratio — but liquidity is thin, with a current ratio of 0.83 and cash of only $248.44 million at quarter-end. The company funds itself internally and via debt markets rather than equity, and the combination of negative equity, sub-1.0 current ratio, and heavy buybacks means financial flexibility depends on continued cash flow; a 46.58x price-to-cash-flow multiple leaves little room for a cash-flow disappointment.
Quarterly Revenue
$674188000.0B
2026-06
Revenue YoY Growth
+25.7%
YoY Comparison
Gross Margin
87.1%
Latest Quarter
Free Cash Flow
$996023000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is FICO Overvalued?
Because net income is positive ($237.17 million in Q3 2026), the PE ratio is the appropriate primary metric: FICO trades at 55.63x trailing earnings but only 15.55x forward earnings, an extraordinary 72% compression that implies the market expects earnings to roughly triple. That gap is the single most important valuation signal in the dataset — either the forward estimate of $62.78 in EPS is badly stale relative to the regulatory shock, or the stock is pricing a severe earnings reset that the trailing multiple does not yet reflect. The 18.22x PS ratio and 9.18x EV/Sales sit alongside a 41.23x EV/EBITDA, all elevated for a company whose stock has halved.
Peer comparison is constrained because the provided valuation dataset contains no explicit industry-average multiples, so a precise premium/discount spread cannot be computed; however, FICO's 18.22x sales and 41.23x EV/EBITDA are far above typical application-software norms (generally high-single-digit to low-teens EV/Sales for mature SaaS), reflecting the scarcity of a regulated near-monopoly. The 1.89x PEG ratio suggests the premium is roughly justified by expected growth on paper, but that PEG relies on forward EPS estimates that may not survive a regulatory repricing. The negative P/B of -20.78 is not meaningful for comparison purposes given the buyback-driven negative equity.
Historically, FICO's own valuation band has collapsed: the PE ratio was 87.70x in Q4 2024, 79.51x in Q1 2025, and 69.12x in Q2 2025, versus 55.63x today, while PS fell from 105.68x in Q4 2024 to 18.22x now — a move from the very top of its historical band to the bottom. This compression is the market repricing FICO from a premium-compounding monopoly to a policy-exposed utility, and whether that is a value opportunity or fundamental deterioration hinges entirely on the durability of Scores pricing power; at 15.55x forward earnings, the stock is discounting a meaningful haircut to that franchise.
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 and operational risks center on the concentration of profit in the Scores segment, which at $458.90M of $674.19M in Q3 2026 revenue (~68%) is the engine of the 87.09% gross margin and 53.79% operating margin. That royalty-like stream is levered to US mortgage and card origination volumes, so a housing slowdown would hit revenue precisely where margins are highest. The balance sheet offers little buffer: current ratio is 0.83, cash was only $248.44M at quarter-end, and debt-to-equity of -1.76 with a -20.78 P/B reflects buyback-driven negative equity — the company repurchased $2.27B of stock in Q3 while repaying $1.93B of debt, leaving financial flexibility dependent on continued free cash flow of $996.02M TTM. Interest expense also rose to $59.88M in Q3 from $32.90M a year earlier, a reminder that the debt-funded capital return model gets more expensive if rates stay high.
Market and competitive risks are dominated by valuation compression and policy. Even after halving, FICO trades at 18.22x sales, 9.18x EV/Sales and 41.23x EV/EBITDA — multiples that assume monopoly economics persist; any regulatory cap or mandated alternative scoring model would force a re-rating toward utility-like levels. The PEG of 1.89 relies on forward EPS estimates ($62.78 average, range $45.40–$70.92) that may prove stale relative to the September shock, and the 3.4x spread between the $490 low and $1,675 high target shows the sell-side has no consensus on the damage. With a beta of 1.341, FICO is ~34% more volatile than the market, and the September 4 jobs report that raised Fed hike odds is a reminder that higher rates pressure both mortgage origination volumes and long-duration equity multiples. Competitive threats from AI-driven underwriting models (the Upstart narrative in recent coverage) add a longer-term structural question mark over the score franchise.
In a worst-case scenario, a formal regulatory action capping or displacing FICO score pricing would combine with a mortgage-volume downturn to compress Scores revenue and margins simultaneously, while the negative-equity balance sheet limits the buyback support that has historically cushioned drawdowns. The realistic downside anchor is the 52-week low of $586.05, about -24% from $771.19, and the analyst low target of $490 implies roughly -36.5%. The stock has already demonstrated a -68.48% max drawdown and a -30% two-day gap, so a retest of the $592–$618 panic-low zone — and a break below it — is a credible path that would put another -20% to -25% in play from current levels.