Technology
43/100
43/100Is FICO-Fair Isaac a buy?
Wednesday 30 September 2026
Why now: The timing case is negative: FICO's durable franchise is being repriced after mortgage lenders gained a meaningful competing score option. The shares are now at $617.87 in premarket trading, down 26.5% from the prior close, and the next important fact is whether mortgage pricing and volume hold up.
Upside: The current Wall Street target is $1,321.73, implying 113.9% upside from the quoted premarket price.
Risks: The central risk is that lender choice shifts mortgage originations away from FICO or weakens its pricing power. High leverage makes a lasting reduction in score economics more damaging to equity holders.
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Scorecard
Read:Strong metricsSolid metricsSelectiveCautionUnfavourableN/A
| Scorecard | 43/100 | |
|---|---|---|
| Company Detail | FICO - Fair Isaac Corporation | |
| Price as at 29 September 2026 | $617.87 | |
| Market cap | $13.3B | |
| Quality and Fundamental Score (100) | ||
| Breakout / Early-Momentum /20 | 0/20 | |
| Rev/EPS Momentum /20 | 15/20 | |
| Business Quality /15 | 14/15 | |
| Balance Sheet /15 | 6/15 | |
| Valuation /10 | 8/10 | |
| Industry Relative Strength /10 | 0/10 | |
| Macro / Sector Tailwind /10 | 0/10 | |
| Growth | ||
| Cash runway | Cash generative | |
| Revenue YoY | +15.9% | |
| EPS YoY | +29.8% | |
| FCF YoY | +26.7% | |
| Gross margin | 82.2% | |
| Valuation & Trend | ||
| Trailing P/E | 17.7x | |
| Forward P/E | 14.4x | |
| RSI (14d) | 17 | |
| vs 50d SMA | -41.9% | |
| Support cushion | −3.7% | |
| Sentiment | ||
| Wall Street verdict | Aligned | |
| News tone | Negative | |
| Dividend | — | |
How are these colored?
| Metric | Strong metrics | Solid metrics | Selective | Caution | Unfavourable |
|---|---|---|---|---|---|
| Overall score | ≥ 80 | 70-79 | 60-69 | 50-59 | < 50 |
| Business quality /15 | ≥ 12 | 10-11 | 8-9 | 6-7 | < 6 |
| Balance sheet /15 | ≥ 12 | 10-11 | 8-9 | 6-7 | < 6 |
| Market cap | ≥ $20B | $5B-$20B | $2B-$5B | $1B-$2B | < $1B |
| Cash runway | ≥ 3 yr or cash generative | 1.5-3 yr | 0.75-1.5 yr | 0.25-0.75 yr | < 0.25 yr |
| Revenue YoY | ≥ 15% | 5-15% | 0-5% | -5-0% | < -5% |
| EPS YoY | ≥ 20% | 5-20% | 0-5% | -5-0% | < -5% |
| FCF YoY | ≥ 10% | 1-10% | 0-1% | -5-0% | < -5% |
| Gross margin | ≥ 60% | 40-60% | 25-40% | 10-25% | < 10% |
| Trailing P/E | < 15 | 15-25 | 25-35 | 35-40 | > 40 or neg |
| Forward P/E | < 15 | 15-25 | 25-35 | 35-40 | > 40 or neg |
| RSI (14d) | 50-70 | 45-50 or 70-75 | 40-45 or 75-78 | 30-40 or 78-80 | < 30 or > 80 |
| vs 50d SMA | +2% to +15% | 0-2% or 15-25% | -2-0% or 25-35% | -3--2% or 35-40% | < -3% or > 40% |
| Support cushion | 2-10% above | 0-2% | 10-15% | 15-20% | price below support |
| Wall Street verdict | Aligned | — | Mixed | — | Disagrees |
| News tone | Positive | — | Neutral / Mixed | — | Negative |
| Dividend | Yield ≥ 2% & growing | Growing | Flat payer ≥ 1% | Low / flat | Cutting |
Detailed Analysis — Wednesday 30 September 2026
What they do
Fair Isaac Corporation sells credit-risk scores and decision software. Its FICO Score is widely used by lenders, while its software helps banks, insurers, retailers and other businesses make lending, fraud and customer-management decisions.
Leadership
William J. LansingCEO
William J.
Steven WeberCFO
Steven Weber has been Executive Vice President and Chief Financial Officer of Fair Isaac Corporation since May 2023.
Customers & notable contracts
Receiver of capital expenditure: No: FICO mainly receives operating spending for data, scoring and decision software rather than customer capital expenditure budgets.
Main customers
- Fannie Mae-approved mortgage lenders (These lenders use approved credit-score models when selling eligible mortgages to Fannie Mae.)
- Freddie Mac-approved mortgage lenders (These lenders can now choose either Classic FICO or VantageScore 4.0 for eligible loans sold to Freddie Mac.)
- Experian and other consumer reporting agencies (Credit reporting agencies distribute scores to consumers and generate royalty revenue for FICO.)
- Major banks and credit card issuers (FICO provides scores, fraud tools and decision software across consumer lending and account management.)
Summary thesis
- FICO has an unusually strong business model: a deeply embedded credit-risk standard, very high gross margins and decision software with recurring customer workflows.
- The company also generates substantial free cash flow and has reduced its share count materially over five years.
- Those strengths are now offset by a regulatory transition that opens the conforming-mortgage market to a direct competing score, putting the most profitable part of the franchise under review.
Wall Street alignment
Wall Street: Mostly aligned (2/4 positive)
Analyst consensus
Buy (2.20, 20 analysts) · +114% upside
Institutional ownership
102% institutions, insiders 3.0%
Short interest
10.8% of float short · 5.5 d-to-cover
Smart money tape
-1 net (acc 2 / dist 3, last 26d)
Recent news
News Negative · last 7d
Show 4 headlines from the last 7d
2026-09-30Analyst−challenging
Bank of America downgraded FICO to Neutral from Buy and reduced its price target to $700 from $1,400. The change followed mortgage credit scoring policy developments that could weaken FICO's pricing power and market share in its core mortgage business.
2026-09-29Macro−challenging
TransUnion extended its 99-cent pricing for VantageScore 4.0 mortgage scores through the end of 2028. The move reinforces a low-cost competing offer against FICO in mortgage originations and increases pressure on FICO's score pricing.
2026-09-28Contracts−challenging
Rocket Mortgage selects VantageScore as preferred model for eligible loans ↗ · Rocket Companies
Rocket Mortgage said it will use VantageScore 4.0 as its preferred credit scoring model for eligible loans after testing. The lender plans to default to VantageScore during the fourth quarter for eligible loans delivered to Fannie Mae, Freddie Mac, and other programs, creating a concrete adoption loss risk for FICO.
2026-09-28Regulatory−challenging
The Federal Housing Finance Agency said Fannie Mae and Freddie Mac would move to one mortgage pricing grid with VantageScore joining the existing FICO Classic framework. The change reduces a structural advantage for FICO's legacy mortgage score and raises the risk of greater score competition.
Dividends
Pays no regular dividend.
Technicals
Price
$617.87
RSI (14d)
16.5
50d SMA
$1,063.22
200d SMA
$1,236.47
vs 50d SMA
-41.9%
vs 200d SMA
-50.0%
Support (52w low)
$595.19 −3.7%
Next swing high (swing high)
$1,014.00 +64.1%
Close as of 2026-09-29.
Score breakdown
Scores 43 out of 100. a mixed overall grade. Business quality, valuation, and earnings trend scored highest. Balance sheet and chart setup weighed on the total. The score is capped because the investment case has suffered a structural blow, not just a weak chart. Mortgage lenders can now choose VantageScore 4.0 for loans sold to Fannie Mae and Freddie Mac, directly challenging FICO's former exclusivity in a major profit pool; the stock also has no qualifying technical setup after a 26.5% premarket gap down.
Component scores are on the scorecard above.
Momentum evidence
- The technical picture is severely damaged.
- The completed daily-bar data already showed a 46.1% decline over 20 trading days and a 49.8% decline over 90 trading days, with no confirmed breakout, no recent reclaim of the 50-day average and a falling 200-day average; premarket trading then extended the decline to $617.87 from $840.89.
Fundamental evidence
- Fair Isaac reported $1.99 billion of annual revenue, $651.95 million of net income and $769.88 million of free cash flow, supported by an 82.2% gross margin.
- Returns on invested capital were 59.4%, and the company has reduced its share count by 17.94% over five years.
- The red flag is leverage: net debt to earnings before interest, taxes, depreciation and amortization was 4.22 times, while total liabilities of $6.13 billion exceeded total assets of $2.04 billion; this structure was manageable when score pricing was protected, but it becomes less forgiving if mortgage economics weaken.
Cash runway: Cash generative (latest annual free cash flow is positive).
Valuation view
At the premarket price, the trailing price-to-earnings ratio is 17.7 and the forward price-to-earnings ratio is 14.4, with enterprise value at 7.8 times sales, 14.7 times earnings before interest, taxes, depreciation and amortization, and 18.8 times free cash flow. Those multiples are no longer demanding for a high-margin software and data franchise, but they assume the mortgage-score profit pool remains substantially intact; the listed analyst target likely does not fully reflect the latest policy shock.
Macro tailwind
Digital lending, fraud control and automated credit decisions remain long-term demand drivers, but high mortgage rates weaken origination activity and the new lender-choice policy shifts the mortgage-score backdrop from protected access toward competition.
What to watch
Upcoming (1–6 months)
- The next earnings release and management commentary on mortgage-score volumes, pricing and lender adoption of VantageScore 4.0.
Ongoing
- Evidence that Classic FICO retains lender preference, along with debt reduction and free-cash-flow conversion.
Long-term case
Over a multi-year horizon, FICO can still benefit from its widely recognized consumer score, entrenched lender relationships, data-science capability and software used in complex credit and fraud decisions. The case now depends on FICO retaining enough mortgage share and pricing power while growing software and non-mortgage score revenue fast enough to diversify the profit base. That is a much less certain ownership story than it was before lender choice expanded across the government-backed mortgage market.
Risks & invalidation
Risks
- VantageScore 4.0 adoption by lenders selling loans to Fannie Mae and Freddie Mac could reduce FICO score volume, price realization or both.
- High debt and continued aggressive share repurchases could constrain financial flexibility if score revenue falls.
- Mortgage originations are sensitive to high interest rates, adding cyclical pressure to the regulatory threat.
Breaks the thesis
- The long-term case fails if management reports sustained mortgage-score share losses or material price concessions without enough software and non-mortgage growth to offset them.
Bottom line
Fair Isaac remains a high-margin, cash-generative credit-data franchise with real strength outside mortgages, but the market is correctly reassessing the value of its former mortgage-score exclusivity. The key swing factor over the next year is whether lenders continue to favor FICO at economically attractive prices after VantageScore 4.0 becomes broadly available. Until that evidence arrives, this is a damaged franchise under review rather than a straightforward long-term candidate.