FICO
FICO
$985.39
+2.57%
Fair Isaac Corporation (FICO) is an applied analytics company best known for the FICO Score, the dominant US benchmark for consumer creditworthiness, alongside a software business selling analytics, decisioning, workflow, and fraud tools primarily to financial institutions. The company operates as a quasi-monopoly in credit scoring with deep entrenchment across lenders, government-sponsored enterprises, and consumer-facing channels, giving it exceptional pricing power and a recurring, high-margin revenue base. The current investor narrative is dominated by a violent de-rating: the stock has fallen roughly 38% over the past year and about 40% year-to-date, with a sharp single-day drop in early September 2026, even as the underlying business posted 38.7% year-over-year revenue growth in its most recent quarter. Debate centers on whether this is a sentiment-driven dislocation in a structurally advantaged franchise or the market pricing in genuine threats — mortgage-volume sensitivity, regulatory scrutiny of score pricing, and competitive noise from AI-driven lending models like Upstart — against a backdrop of elevated valuation and negative book equity from aggressive buybacks.…
FICO
FICO
$985.39
Related headlines
Investment Opinion: Should I buy FICO Today?
Based on the synthesis of fundamental strength, valuation, and analyst consensus, the recommendation is a Hold with a bullish bias for long-term investors. The core thesis is that FICO's dominant market position and exceptional profitability are intact, but near-term headwinds and technical weakness warrant caution. The analyst consensus rating of 'buy' (mean 2.0) and average target price of $1445.42 imply significant upside, but the wide target range ($696–$1750) reflects high uncertainty.
Supporting evidence includes: 1) Revenue growth of 38.69% YoY, far exceeding typical software peers; 2) Operating margin of 58.19% and net margin of 38.23%, demonstrating pricing power; 3) Forward PE of 18.55x, which is low relative to the company's historical average and the broader market; 4) Free cash flow of $892.69 million TTM, providing ample capital for buybacks and debt reduction. The implied upside to the average analyst target is 46.7%, suggesting the market may be overly pessimistic.
Key risks that could invalidate the thesis include: 1) Regulatory action on FICO Score pricing, which could compress margins; 2) Competitive disruption from AI lending platforms like Upstart; 3) A mortgage market downturn reducing demand for credit scores. The rating would upgrade to Buy if the stock stabilizes above $1,100 and forward PE remains below 20x, or downgrade to Sell if revenue growth decelerates below 20% or if regulatory headwinds materialize. Relative to its history and peers, FICO appears undervalued on a forward earnings basis but still carries a premium on sales and EBITDA multiples.
Sign up to view all
FICO 12-Month Price Forecast
FICO presents a compelling value opportunity for patient investors, with a forward PE of 18.55x that seems too low for a company growing revenue at 38.69% and generating 58.19% operating margins. However, the technical breakdown and negative equity raise valid concerns. The neutral stance reflects the balance between exceptional fundamentals and significant market skepticism. An upgrade to bullish would require evidence of stabilizing price action and clarity on regulatory risks; a downgrade to bearish would follow a revenue growth deceleration below 20% or adverse regulatory action.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on FICO's 12-month outlook, with a consensus price target around $1445.42 and implied upside of +46.7% versus the current price.
Average Target
$1445.42
0 analysts
Implied Upside
+46.7%
vs. current price
Analyst Count
—
covering this stock
Price Range
$696 - $1750
Analyst target range
Coverage is robust with 19 analysts, and the consensus recommendation is "buy" with a recommendation mean of 2.0. The average price target of $1445.42 implies roughly 46.7% upside from the current price of $985.39, a strikingly bullish consensus relative to the stock's recent collapse. Estimated EPS averages $83.61 (range $76.25 to $87.74) and estimated revenue averages $3.74 billion, indicating analysts expect continued strong fundamental performance. The consensus clearly leans bullish, and the wide gap between the average target and the market price suggests either significant undervaluation or that analysts have been slow to revise downward after the September selloff.
The target range is exceptionally wide — from a low of $696.00 to a high of $1750.00, a spread of more than 2.5x — which signals unusually high uncertainty and low conviction. The high target of $1750 implies multiple expansion back toward prior premium levels plus sustained 30%+ growth, while the low target of $696 prices in margin compression, mortgage-market weakness, or regulatory pressure on score pricing. Institutional ratings show a mixed but stable picture: recent actions include UBS maintaining Neutral (July 2026), Needham and B of A reiterating Buy (June and May 2026), Jefferies at Buy, and Wells Fargo at Overweight, with JP Morgan staying Neutral. The absence of recent downgrades despite the price collapse is notable, but the wide target dispersion and the presence of several Neutral ratings suggest the Street is divided on whether the selloff is an opportunity or a warning.
Bulls vs Bears: FICO Investment Factors
The bull case rests on FICO's exceptional fundamental performance—38.69% revenue growth, 58.19% operating margin, and robust free cash flow—which contrasts sharply with the stock's 38% decline. The bear case emphasizes the severe technical breakdown, negative equity, and competitive threats from AI lending platforms. Currently, the bear evidence appears stronger due to the persistent downtrend and market skepticism, but the fundamental strength suggests a potential dislocation. The single most important tension is whether the market is correctly pricing in structural threats to FICO's monopoly or overreacting to transient issues; resolution hinges on upcoming earnings and regulatory developments.
Bullish
- Explosive revenue growth: Revenue surged 38.69% YoY to $691.68 million in the latest quarter, accelerating from $515.75 million in Q4 2025 and $511.96 million in Q1 2026. This sequential and YoY acceleration underscores the pricing power and resilience of the FICO Score franchise.
- Exceptional profitability and margin expansion: Gross margin expanded to 86.81% from 82.43% a year ago, while operating margin climbed to 58.19% from 49.25%. Net income reached $264.46 million, a 38.23% net margin, demonstrating significant operating leverage.
- Deep valuation compression: The trailing PE has fallen from 79.51x in Q1 2025 to 55.63x, and the PS ratio collapsed from 110.31x to 18.22x. The forward PE of 18.55x is near historical lows, suggesting the market has already priced in substantial pessimism.
- Strong free cash flow generation: FICO generated $892.69 million in trailing free cash flow and $223.09 million in the latest quarter, funding aggressive buybacks ($605.40 million) and debt reduction ($438.22 million). This financial flexibility supports shareholder returns.
Bearish
- Severe technical breakdown: The stock trades at $985.39, just 5.8% above its 52-week low of $870.01 and 50.7% below its 52-week high. The 1-year decline of 38.28% and YTD drop of 40.03% reflect a sustained bear phase with no clear bottom.
- Negative equity and liquidity concerns: Shareholders' equity is negative, evidenced by a debt-to-equity ratio of -1.76 and price-to-book of -20.78, due to years of buybacks. The current ratio of 0.83 is below 1.0, indicating tight short-term liquidity with only $219.42 million in cash.
- Premium valuation despite decline: The PS ratio of 18.22x and EV/EBITDA of 41.23x remain elevated versus software peers. The PEG ratio of 1.89 exceeds the fair-value threshold of 1.0, implying the stock is not cheap even after its fall.
- Competitive and regulatory threats: AI-driven lending models like Upstart are gaining traction, as highlighted by recent news of institutional investment and growth predictions. Additionally, regulatory scrutiny over FICO Score pricing could pressure margins.
FICO Technical Analysis
FICO is in a pronounced downtrend, with the current price of $985.39 sitting just 5.8% above its 52-week low of $870.01 and a staggering 50.7% below its 52-week high of $1998.01 — meaning the stock trades at only about 49% of its 52-week range. The 1-year price change of -38.28% and year-to-date decline of -40.03% confirm a sustained bear phase rather than a mere pullback, and the -50.93% max drawdown underscores how severe the reversal has been from prior highs. Positioning this close to the 52-week low signals a classic falling-knife setup: value hunters may see opportunity, but momentum remains firmly negative until a base forms.
Short-term momentum is weak and decelerating, with a 1-month change of -5.63% and a 3-month change of -16.44%, both worse than the already-negative 1-year trend on a relative basis. The most alarming datapoint is the early-September gap: the stock plunged from $1118.93 on September 3 to $932.26 on September 4, a roughly 16.7% single-session collapse, followed by a modest bounce to $985.39. Relative strength versus the S&P 500 is deeply negative across every window — -4.57 over 1 month, -19.48 over 3 months, and -54.50 over 1 year — while SPY itself gained 16.22% over the past year, highlighting severe idiosyncratic underperformance rather than broad market weakness. Volume of 400,249 on the latest session suggests the bounce is occurring on relatively light participation, which weakens conviction in any near-term reversal.
Key technical levels are now well-defined: support rests at the 52-week low of $870.01, roughly 11.7% below the current price, while resistance looms at the 52-week high of $1998.01, more than double the current level. A breakdown below $870 would likely trigger further capitulation and open deeper downside, whereas reclaiming the $1,100–$1,150 zone (the pre-gap area) would be the first meaningful sign of stabilization. With a beta of 1.318, FICO is about 32% more volatile than the broader market, meaning position sizing should be conservative; the short ratio of 5.43 also indicates meaningful short interest that could fuel sharp squeezes on any positive catalyst, adding two-sided risk.
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
-38.3%
Cumulative gain past year
| Period | FICO Return | S&P 500 |
|---|---|---|
| 1m | -5.6% | -1.6% |
| 3m | -16.4% | +1.3% |
| 6m | -12.9% | +13.9% |
| 1y | -38.3% | +16.3% |
| ytd | -40.0% | +12.1% |
Bobby - Your AI Investment Partner
Get real-time data, AI-driven personalized investment analysis to make smarter investment decisions
FICO Fundamental Analysis
FICO's revenue trajectory remains robust despite the stock's collapse: the most recent quarter (ending 2026-03-31) delivered revenue of $691.68 million, up 38.69% year-over-year from $498.74 million in the prior-year quarter. Sequentially, revenue rose from $511.96 million in Q1 2026 and $515.75 million in Q4 2025, indicating accelerating top-line momentum rather than deceleration. Segment data shows Scores generating $474.97 million and Applications contributing $216.70 million, confirming that the high-margin credit-scoring franchise remains the dominant growth and profit engine. This divergence between strong fundamental growth and a -38% stock price is the central tension in the investment case.
Profitability is exceptional: net income in the latest quarter was $264.46 million on a 38.23% net margin, with a gross margin of 86.81% and an operating margin of 58.19%. These margins are far above typical software-industry levels and reflect the pricing power of the FICO Score monopoly. Margins have expanded meaningfully — gross margin rose from 82.43% in the year-ago quarter to 86.81%, and operating margin climbed from 49.25% to 58.19% — while EBITDA reached $404.50 million (58.48% EBITDA margin) versus $247.81 million a year earlier. The company is unambiguously and increasingly profitable, which makes the equity de-rating a valuation and sentiment event rather than a fundamental deterioration.
Balance sheet and cash flow metrics are more nuanced: FICO generates strong free cash flow of $892.69 million on a trailing-twelve-month basis, with $223.09 million in the latest quarter, and operating cash flow of $223.36 million. However, the company carries negative shareholders' equity, evidenced by a debt-to-equity ratio of -1.76 and a price-to-book of -20.78, the result of years of aggressive buybacks — $605.40 million repurchased in the latest quarter alone and $438.22 million of debt repayment. The current ratio of 0.83 is below 1.0, signaling tight short-term liquidity, and cash on hand was only $219.42 million at quarter-end. ROE of -37.34% is a mechanical artifact of negative equity rather than a sign of poor returns; ROA of 39.98% confirms the underlying asset efficiency is outstanding, and the business funds itself internally with ample FCF despite the leveraged capital structure.
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
Open an Account, get $2 TSLA now!
Valuation Analysis: Is FICO Overvalued?
Because FICO is solidly profitable — trailing net income is positive and the latest quarterly net income was $264.46 million — the PE ratio is the appropriate primary metric. The trailing PE stands at 55.63x versus a forward PE of just 18.55x, an extraordinarily wide gap that implies the market expects a massive earnings step-up; consensus estimated EPS of $83.61 versus the trailing figure of roughly $17.7 (per the key metrics EPS field) suggests analysts anticipate a dramatic profit acceleration. This forward-vs-trailing spread is the single most important valuation signal: either the market is pricing in an enormous earnings recovery, or the trailing EPS figure is distorted by a one-time item.
On peer comparison, FICO's PS ratio of 18.22x and EV/Sales of 10.90x sit at a premium to typical infrastructure-software peers, though the EV/EBITDA of 41.23x is elevated even for high-margin software. The PEG ratio of 1.89 is above the 1.0 threshold that conventionally marks fair growth-adjusted value, suggesting the stock is not cheap even after its decline. However, with a net margin of 32.75% and gross margin of 82.23%, FICO's profitability is far superior to the average software company, which arguably justifies a premium — the question is whether 18.55x forward earnings adequately compensates for the risk embedded in the recent price action.
Historically, FICO's valuation has compressed dramatically: the PE ratio fell from 79.51x in Q1 2025 and 69.12x in Q2 2025 to 55.63x currently, while the PS ratio collapsed from 110.31x to 18.22x over the same span. This places the stock near the bottom of its own multi-year valuation band, a stark reversal from the premium multiples it commanded through 2024 and early 2025. Near-historical-lows valuation can signal either a compelling value opportunity or the market's judgment that the growth trajectory is permanently impaired; given the 38.69% revenue growth and 58.19% operating margin, the former interpretation currently has more fundamental support, but the market is clearly demanding a much lower multiple for the 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
FICO faces significant financial and operational risks. The company carries negative shareholders' equity, with a debt-to-equity ratio of -1.76 and a price-to-book of -20.78, a result of aggressive buybacks ($605.40 million in the latest quarter) that have depleted equity. The current ratio of 0.83 is below 1.0, indicating potential liquidity constraints, with only $219.42 million in cash. Additionally, interest expense has risen to $44.58 million in the latest quarter, up from $31.38 million a year ago, increasing financial leverage risk. These factors could limit financial flexibility if growth slows or refinancing conditions worsen.
Market and competitive risks are pronounced. FICO's premium valuation—PS ratio of 18.22x and EV/EBITDA of 41.23x—leaves it vulnerable to multiple compression if growth decelerates or if competitors like Upstart gain market share. The recent news highlights Upstart's AI-driven lending model and institutional interest, posing a long-term threat to FICO's scoring dominance. Regulatory scrutiny over FICO Score pricing could also pressure margins. With a beta of 1.318, the stock is highly sensitive to market downturns, and its relative strength versus the S&P 500 is deeply negative (-54.50 over 1 year), indicating idiosyncratic weakness.
The worst-case scenario involves a combination of regulatory intervention, accelerated competitive disruption, and a mortgage market slowdown. If FICO's pricing power erodes and revenue growth stalls, the stock could revisit its 52-week low of $870.01, representing an 11.7% decline from the current price. More severely, the analyst low target of $696.00 implies a 29.4% downside. In a prolonged bear market, the stock could fall to the $700–$800 range, a loss of 19–29% from current levels. The max drawdown of -50.93% over the past year illustrates the potential severity of such a scenario.
FAQ
The most severe risk is regulatory intervention on FICO Score pricing, which could compress margins and limit growth. Competitive threats from AI-driven lending platforms like Upstart are emerging, potentially eroding FICO's market share over time. Financial risks include negative shareholders' equity (debt-to-equity of -1.76) and a current ratio below 1.0, which could constrain flexibility in a downturn. Additionally, the stock's high beta (1.318) and significant short interest (short ratio 5.43) amplify volatility, making it susceptible to sharp drawdowns.
Our 12-month forecast presents three scenarios: a bull case (30% probability) targeting $1445–$1750, a base case (50% probability) targeting $1100–$1300, and a bear case (20% probability) targeting $696–$870. The base case assumes revenue growth moderates to 20-25% and the stock gradually recovers as fears subside. The most likely scenario is the base case, driven by continued strong execution and no major regulatory setbacks. However, the wide range reflects high uncertainty, and investors should be prepared for volatility.
On a forward basis, FICO appears undervalued. The forward PE of 18.55x is near historical lows, especially compared to the trailing PE of 55.63x and the company's 5-year average forward PE of over 30x. The PS ratio of 18.22x and EV/EBITDA of 41.23x are still premium to the broader market but justified by FICO's exceptional margins and growth. The market seems to be pricing in significant pessimism, possibly overestimating regulatory and competitive threats. If the company continues to deliver strong results, the valuation multiple could expand, driving the stock higher.
FICO presents a compelling risk/reward proposition for long-term investors. The stock trades at a forward PE of 18.55x, which is remarkably low for a company growing revenue at 38.69% YoY with operating margins of 58.19%. Analyst consensus is bullish, with an average target of $1445.42 implying 46.7% upside. However, the stock is in a severe downtrend, just 5.8% above its 52-week low, and faces regulatory and competitive risks. For investors with a high risk tolerance and a multi-year horizon, the potential reward outweighs the risks, but near-term volatility is likely to persist.
FICO is best suited for long-term investors with a time horizon of at least 3-5 years. The company's strong fundamentals, wide moat, and consistent free cash flow generation support a buy-and-hold strategy. Short-term trading is risky due to high volatility (beta 1.318) and negative momentum. The stock does not pay a dividend, so returns depend on capital appreciation. Given the current dislocation, patient investors could be rewarded as the market recognizes the value, but they must endure potential further downside in the near term.