FICO
FICO
$1149.75
-1.02%
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 market position in the credit scoring space, with its scores being a critical component of the U.S. lending ecosystem. Currently, the stock is under significant pressure, with a 1-year decline of 17.6% and a year-to-date drop of 33.9%, as investors grapple with concerns about growth sustainability, competitive threats, and broader market volatility, despite the company's strong recent earnings performance.…
FICO
FICO
$1149.75
Related headlines
Investment Opinion: Should I buy FICO Today?
Based on the analysis, FICO is rated a Hold. The consensus is Buy with an average target of $1,472.63, implying 35.6% upside, but the stock's severe decline and high valuation warrant caution. The thesis is that FICO's strong fundamentals are offset by market skepticism and competitive risks, making it a wait-and-see situation.
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FICO 12-Month Price Forecast
The AI assessment is neutral, reflecting the tension between strong fundamentals and a weak stock price. The market is pricing in significant risks, but the company's growth and profitability are impressive. If FICO can sustain its growth trajectory and navigate competitive threats, the stock could recover. However, the high valuation and negative momentum suggest caution. I would upgrade to bullish if the stock stabilizes above $1,100 and revenue growth remains above 30%, and downgrade to bearish if revenue growth falls below 15% or the stock breaks below $870.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on FICO's 12-month outlook, with a consensus price target around $1476.32 and implied upside of +28.4% versus the current price.
Average Target
$1476.32
0 analysts
Implied Upside
+28.4%
vs. current price
Analyst Count
—
covering this stock
Price Range
$707 - $1750
Analyst target range
FICO is covered by 19 analysts, with a consensus recommendation of 'Buy' and a mean recommendation score of 1.90 (where 1 is Strong Buy and 5 is Sell). The average target price is $1,472.63, implying a 35.6% upside from the current price of $1,085.78. The distribution includes 12 Buy ratings, 5 Hold ratings, and 2 Sell ratings, indicating a generally bullish sentiment but with some caution. The target price range is wide, from a low of $707.00 to a high of $1,750.00, reflecting significant uncertainty about the company's future. The high target assumes continued strong growth and margin expansion, while the low target prices in potential competitive disruption or regulatory changes. Recent ratings actions have been mostly neutral, with UBS maintaining a Neutral stance and several firms reiterating Buy ratings, suggesting that analysts are not aggressively changing their views despite the stock's decline.
Bulls vs Bears: FICO Investment Factors
FICO presents a stark contrast between exceptional operational performance and a deeply troubled stock price. The bull case rests on accelerating revenue growth, expanding margins, and a dominant franchise, while the bear case is driven by a high valuation, negative equity, and competitive threats. Currently, the bearish sentiment appears stronger given the stock's persistent decline and the market's skepticism about sustainability. The single most important tension is whether FICO can maintain its high growth and margins in the face of AI-driven disruption and macro headwinds; if it can, the stock is deeply undervalued, but if not, the premium valuation will compress further.
Bullish
- Exceptional Revenue Acceleration: Q2 FY2026 revenue surged 38.7% YoY to $691.7M, up from 16.4% growth in the prior quarter, indicating accelerating demand for both Scores and Applications. This momentum is rare for a mature analytics firm and suggests strong market tailwinds.
- Best-in-Class Profitability: Gross margin expanded to 86.8% (from 82.4% a year ago) and operating margin hit 58.2%, reflecting significant operating leverage. Net margin improved to 38.2% from 32.6%, showcasing the company's ability to convert revenue into profit efficiently.
- Dominant Credit Scoring Franchise: FICO's credit scores are the industry standard in U.S. lending, providing a durable competitive moat. The Scores segment alone generated $475M in quarterly revenue, underscoring its critical role in the financial ecosystem.
- Strong Cash Generation: FICO generated $223.4M in operating cash flow and $223.1M in free cash flow in Q2, with a free cash flow yield of 2.5%. This cash generation supports debt servicing and potential shareholder returns despite a negative equity position.
Bearish
- Severe Stock Price Decline: FICO is down 33.9% YTD and 17.6% over the past year, trading 45.7% below its 52-week high of $1,998.01. The stock is only 18% above its 52-week low, indicating persistent selling pressure and a broken downtrend.
- High Valuation Premium: Trailing PE of 55.6x is 122% above the industry average of 25x, and the forward PE of 20.5x still implies high expectations. The PEG ratio of 1.89 suggests the stock is not cheap even after the decline, leaving limited margin of safety.
- Negative Shareholders' Equity: Debt-to-equity ratio of -1.76 reflects negative equity due to aggressive buybacks and debt, increasing financial risk. The current ratio of 0.83 indicates potential liquidity strain, though cash flow mitigates immediate concerns.
- Competitive Threats from AI Lenders: Recent news highlights Upstart's AI-driven lending model as a disruptive force, with institutional investors loading up on Upstart shares. If alternative credit scoring models gain traction, FICO's dominance could erode.
FICO Technical Analysis
FICO's price trend over the past year has been decidedly bearish, with the stock down 17.6% over the last 12 months and currently trading at $1,085.78, which is only 18% above its 52-week low of $870.01 and 45.7% below its 52-week high of $1,998.01. This positioning near the lower end of its range suggests a market in distress, with the stock having lost over half its value from its peak, indicating a sustained downtrend rather than a mere pullback. The 6-month price change of -19.3% further confirms the persistent negative momentum, with the stock failing to establish any meaningful base.
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
-14.5%
Cumulative gain past year
| Period | FICO Return | S&P 500 |
|---|---|---|
| 1m | -6.3% | +1.9% |
| 3m | -7.3% | +2.3% |
| 6m | -14.9% | +10.6% |
| 1y | -14.5% | +19.5% |
| ytd | -30.0% | +11.8% |
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FICO Fundamental Analysis
FICO's revenue trajectory has been robust, with the most recent quarter (Q2 FY2026, ending March 31, 2026) reporting revenue of $691.7 million, a 38.7% year-over-year increase, accelerating from the prior quarter's $512.0 million (which was up 16.4% YoY). This growth is driven by both segments, with Scores revenue at $475.0 million and Applications at $216.7 million, reflecting strong demand for credit scores and analytics software. The company's profitability is exceptional, with a gross margin of 86.8% in the latest quarter, up from 82.4% a year ago, and an operating margin of 58.2%, demonstrating significant operating leverage. Net income for the quarter was $264.5 million, yielding a net margin of 38.2%, a substantial improvement from 32.6% in the year-ago quarter, indicating that FICO is not only growing but also becoming more efficient. The 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 heavy share buybacks and debt financing; however, FICO generated $223.4 million in operating cash flow and $223.1 million in free cash flow in the latest quarter, with a free cash flow yield of 2.5% based on the current market cap. The company's current ratio of 0.83 suggests potential liquidity concerns, but its consistent cash generation and access to credit markets mitigate this risk.
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 FICO's positive net income, the PE ratio is the most appropriate valuation metric. The trailing PE is 55.6x, while the forward PE is 20.5x, implying that the market expects significant earnings growth, with the forward PE being 63% lower than the trailing, reflecting anticipated EPS expansion from $19.5 to $83.6 per share. Compared to the industry average PE of 25x (based on available data), FICO trades at a 122% premium, which is justified by its superior growth and profitability, as evidenced by its 38.7% revenue growth and 38.2% net margin. Historically, FICO's trailing PE has ranged from 23.8x to 87.7x over the past five years, and the current 55.6x is near the middle of this range, suggesting that the stock is not at extreme valuation levels but still reflects high expectations for continued growth.
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 risks are significant due to FICO's negative shareholders' equity of -1.76 debt-to-equity, a result of heavy share buybacks and debt financing. The current ratio of 0.83 suggests potential liquidity issues, though the company generates robust free cash flow ($223.1M in Q2) to service its debt. Interest expenses of $44.6M in Q2 are manageable but could rise if rates stay high, pressuring net income. Revenue concentration in the Scores segment (69% of Q2 revenue) exposes FICO to any regulatory or competitive changes in credit scoring, and a slowdown in mortgage or consumer lending could directly impact growth. Earnings volatility is evident from the wide quarterly EPS swings (from $5.54 to $11.19), reflecting sensitivity to one-time items and seasonality.
FAQ
The key risks are: 1) Financial risk from negative shareholders' equity and a current ratio of 0.83, which could strain liquidity if cash flows weaken. 2) Competitive risk from AI-driven lenders like Upstart, which could disrupt FICO's credit scoring dominance. 3) Macro risk, as a recession or high interest rates could reduce lending volumes and hurt revenue. 4) Valuation risk, as the stock trades at a premium PE of 55.6x, leaving little room for error. The most severe risk is a combination of these factors, which could drive the stock down to the 52-week low of $870 or lower.
The 12-month forecast is mixed, with a base case probability of 50% targeting $1,200-$1,472, a bull case probability of 25% targeting $1,472-$1,750, and a bear case probability of 25% targeting $707-$870. The base case assumes continued revenue growth above 20% and stable margins, leading to a recovery to the analyst average target. The bull case requires accelerating growth and market confidence, while the bear case involves competitive disruption or macro headwinds. The most likely scenario is the base case, with the stock recovering modestly as the market recognizes FICO's fundamental strength.
FICO is trading at a trailing PE of 55.6x, which is 122% above the industry average of 25x, suggesting it is overvalued on a historical basis. However, the forward PE of 20.5x implies that the market expects significant earnings growth, with EPS projected to rise from $19.5 to $83.6. The PEG ratio of 1.89 indicates that the stock is not cheap relative to its growth rate. Compared to its own history, the current PE is near the middle of the 23.8x-87.7x range, so it is not at extreme levels. Overall, FICO is fairly valued if it can deliver the expected growth, but any shortfall could lead to multiple compression.
FICO is a good buy for investors with a long-term horizon and high risk tolerance, given its strong fundamentals and potential for recovery. The stock is down 33.9% YTD, but the analyst consensus is Buy with an average target of $1,472.63, implying 35.6% upside. However, the high valuation (trailing PE of 55.6x) and competitive risks mean it is not a low-risk investment. A better entry point might be near the 52-week low of $870, where the downside is limited. For those who believe in FICO's moat and growth, the current price offers a compelling risk/reward, but it is not a buy for conservative investors.
FICO is more suitable for long-term investment due to its high volatility (beta of 1.32) and the time needed for its growth story to play out. Short-term trading is risky given the stock's 33.9% YTD decline and negative momentum. For long-term investors, the company's dominant position in credit scoring and strong cash flow generation provide a solid foundation. A minimum holding period of 3-5 years is recommended to ride out volatility and benefit from earnings growth. The stock has no dividend, so returns rely on capital appreciation, which could be substantial if the company executes well.