Fair Isaac Corporation (NYSE: FICO), the brains behind the widely-used FICO Score, is making waves on Wall Street today. The latest news revolves around a reiterated "Buy" rating from Jefferies, which also maintained a high price target for FICO stock.
This renewed confidence comes as the company rolls out a new direct pricing model for its mortgage scores. This change is a game-changer, as it directly addresses long-standing critiques about the high cost of FICO scores in the lending ecosystem.
Jefferies analysts have called this introduction of two new pricing programs a "One Giant Leap," noting that the initiative is arriving earlier than anticipated. These new models will allow resellers to calculate and distribute FICO Scores directly to customers, a process set to begin in January.
The two main pricing options are:
Performance Model: A $4.95 per score fee, plus a $33 fee per borrower when a FICO-scored loan successfully closes.
Traditional Model: A flat $10.00 per score fee with no additional borrower fee at the loan closing.
Analysts at Jefferies estimate that these programs could generate at least $300 million in incremental revenue for Fair Isaac by calendar year 2026, which could translate to a substantial 20-25% adjusted EPS growth for fiscal 2026. This potential growth underscores why the FICO stock rating has been reaffirmed.
The announcement of the FICO Mortgage Direct License Program follows regulatory scrutiny from bodies like the FHFA, suggesting that FICO is strategically adapting to market pressure and lender needs while finding an innovative way to maintain its value capture in the crucial mortgage market. The company’s continued dominance in credit scoring, coupled with a focus on AI models and decision intelligence, keeps the FICO stock in a strong position for the long term.
Risk Disclaimer: This article is for informational purposes only and does not constitute financial advice or a recommendation to buy or sell any securities. Investing in FICO stock or any other financial instrument carries inherent risks, including the potential loss of principal. Always conduct your own research and consult with a qualified financial professional before making any investment decisions.
