Fair Isaac
| CURRENT PRICE | PROBABILITY-WEIGHTED FAIR VALUE | FAIR VALUE RANGE |
|---|---|---|
| $1,122.97 | ~$1,300 | $900 – $1,750 |
| Jul 31, 2026 close — confirm on live feed | House view: Quality compounder, regulatory overhang | Beat & raise; multiple derated from ~$2,000 |
July 2026 update: FICO reported fiscal Q3 2026 (quarter ended June 30) after the close on July 29, 2026. Figures below are verified against the company's SEC Form 8-K (Item 2.02) earnings release[1]. Analyst reaction and estimates are from Benzinga Pro[3]. Scenario targets are independent Sikuli house estimates.
House View: Quality compounder trading through a regulatory overhang (July 2026). Another beat-and-raise: fiscal Q3 revenue of $674.2M (+26% YoY), GAAP EPS $10.45 and non-GAAP EPS $12.18, with Scores revenue up 41% (B2B +49% on higher mortgage-origination score pricing) and free cash flow of $370M. Management raised full-year FY26 guidance to $2.53B revenue (from $2.45B) and $42.43 non-GAAP EPS (from $40.45), and has bought back over $3B of stock YTD, shrinking the share count to ~22.7M. Yet the stock is ~$1,123 — down from a 52-week high near $1,998 — because the monopoly premium is being repriced: the GSEs' acceptance of VantageScore 4.0 and FHFA scrutiny of FICO's mortgage-score pricing put the single most valuable lever (score price hikes) under a political microscope. The fundamentals say pricing power is very much intact today; the multiple (~26x FY26 non-GAAP EPS, versus ~40x+ at the highs) says the market is discounting a future where it erodes. That tension is the whole story. The print itself was "mixed" enough to trade the stock lower: non-GAAP EPS of $12.18 beat the $11.73 consensus, but revenue of $674.2M slightly missed the $678.9M estimate and the raised FY26 adjusted-EPS guide ($42.43) landed just below the ~$43.18 Street number. Post-earnings, the sell-side stayed bullish but reset targets lower — RBC maintained Outperform and cut its target to $1,525 (from $2,400), Wells Fargo raised to $1,450 (Overweight), and Needham reiterated Buy at $1,650. The Street therefore sits well above both the $1,123 tape and our $1,300 base; we hold a more cautious base deliberately, weighting the regulatory/mortgage-pricing bear case more heavily than consensus does. The wide $900–$1,750 range reflects how binary that outcome is.
CURRENT SNAPSHOT
| Metric | Value | Notes / Source |
|---|---|---|
| Stock price | $1,122.97 | Jul 31, 2026 close; 52-wk $870–$1,998 [2] |
| Q3 FY26 revenue | $674.2M (+26% YoY) | Scores +41%; Software +2% [1] |
| Q3 FY26 EPS | $10.45 GAAP / $12.18 non-GAAP | Net income $237M; FCF $370M [1] |
| FY26 revenue guide | $2.53B (raised) | Up from $2.45B [1] |
| FY26 non-GAAP EPS guide | $42.43 (raised) | GAAP EPS $36.86; up from $40.45 [1] |
| Diluted shares | ~22.7M | $3.0B stock repurchased YTD [1] |
| Forward P/E | ~26x FY26 non-GAAP | ~30x GAAP; ~40x+ at the highs |
| Street targets (post-Q3) | ~$1,450 – $1,650 | RBC Outperform $1,525, WF Overweight $1,450, Needham Buy $1,650 [3] |
| Software ARR | +10% YoY | Platform ARR +62%; net retention 109% [1] |
BULL / BASE / BEAR SCENARIOS
| Scenario (weight) | Assumptions | Fair Value |
|---|---|---|
| Bull (25%) | Pricing power holds, VantageScore share loss stays minimal, mortgage volumes recover; multiple re-rates toward ~38x on ~$50 FY27E non-GAAP EPS | $1,750 |
| Base (50%) | Keeps hitting raised guide, FY27 non-GAAP EPS ~$50, multiple settles ~30x FY26 / ~26x FY27 as the regulatory overhang persists but doesn't bite | $1,300 |
| Bear (25%) | FHFA/GSE action forces mortgage-score price rollback or share loss; growth and multiple compress toward ~20x | $900 |
| Probability-weighted | Toll-road monopoly with genuine pricing power, now shadowed by a binary regulatory question on mortgage-score pricing. | ~$1,300 |
Key Risks
- Regulatory pricing: CFPB and lender pushback on mortgage-score pricing increases; antitrust scrutiny possible.
- Mortgage cycle: Tied to home transactions; high rates suppress volumes.
- Alternative data: Long-term threat from alternative-data underwriting (VantageScore, custom models).
- Stock concentration: Heavily owned by quality-growth funds; positioning unwind risk.
What Would Change Our View
- Upside: Mortgage cycle recovery, additional pricing, software platform growth.
- Downside: Regulatory pricing cap, mortgage volumes decline, multiple compression.
Sources
[1] SEC Form 8-K (Item 2.02), FICO fiscal Q3 2026 earnings release, filed Jul 29, 2026 — sec.gov/Archives/…/exhibit991erq32026.htm
[2] https://finance.yahoo.com/quote/FICO/
[3] Benzinga Pro — FICO news feed & analyst ratings (post-Q3 actions: RBC Outperform $1,525, Wells Fargo Overweight $1,450, Needham Buy $1,650) — pro.benzinga.com
Disclaimer
This output is for informational and research-assistance purposes only. It does not constitute investment, legal, tax, accounting, or other professional advice, and it is not a recommendation to buy, sell, or hold any security. Verify material facts independently and consult qualified advisors before making decisions.