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While FICO has surged 49%, Infosys has risen 16.7% and ServiceNow has increased by 16.8%. The broader sector has appreciated 12.5% over the same timeframe.
The robust stock price performance can be attributed to the strong adoption of the FICO Platform and FICO Score, which led to significant growth in its clientele and driven top-line growth.
In third-quarter fiscal 2024, revenues increased 12% year over year, with Software and Scores revenues increasing 5% and 20%, respectively.
Nevertheless, investors should ask this question — will the robust momentum and is it the right time to invest in FICO shares? Let’s analyze.
Strong Demand for The FICO Platform to Boost the Stock
FICO is riding on the strong adoption of its FICO Scores, which remains a dominant player in the consumer credit scoring market.
The robust market position is further supported by the adoption of FICO Score 10-T for non-GSE mortgages in third-quarter fiscal 2024, covering more than $126 billion in annual originations and $380 billion in servicing. This is set to boost future revenues through enhanced credit decision-making and securitization.
FICO’s platform and SaaS services have also seen growth in third-quarter 2024, with total Annual Recurring Revenue (ARR) up 10% and platform ARR up 31%. The land and expand strategy, especially for the FICO platform, is driving this growth. Events like FICO World have also strengthened pipeline growth.
Fair Issac’s expanding clientele is noteworthy, highlighted by its partnership with Cognizant (CTSH - Free Report) to launch a cloud based real-time payment fraud prevention solution powered by FICO Falcon Fraud Manager. The collaboration is aimed at enhancing security measures and streamlining fraud detection for clients across various industries.
FICO and Cognizant’s joint offering leverages AI and machine learning to help banks and other payment service providers in North America protect their customers from fraud.
FICO’s 2024 Outlook Positive
The robust portfolio and an expanding clientele bode well for FICO’s top-line growth trajectory in 2024. Fair Issac expects total revenues of $1.7 billion for this fiscal year.
Non-GAAP earnings are expected to be $23.16 per share.
The Zacks Consensus Estimate for revenues is pegged at $1.71 billion, indicating year-over-year growth of 13.23%.
The consensus mark for fiscal 2024 earnings is pegged at $23.77 per share, declined by a couple of pennies in the past 30 days but still reflecting 20.66% year-over-year growth.
What Should Investors Do with FICO Stock?
Despite FICO’s strong portfolio and growing client base, the slowdown in mortgage origination due to rising interest rates and intense competition in the Score and Software segments is expected to impact FICO’s top-line growth in 2024.
In terms of the forward 12-month Price/Sales ratio, FICO is trading at 26.23X, higher than its median of 20.20X and the Zacks Computers - IT Services sector’s 10.51X reflecting a stretched valuation.
FICO currently carries Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point in the stock.
Image: Bigstock
FICO Surges 49% YTD: Should You Buy, Hold or Sell the Stock?
Fair Issac‘s (FICO - Free Report) shares have outperformed the Zacks Computer & Technology sector and its Zacks IT Services industry peers Infosys (INFY - Free Report) and ServiceNow (NOW - Free Report) on a year-to-date (YTD) basis.
While FICO has surged 49%, Infosys has risen 16.7% and ServiceNow has increased by 16.8%. The broader sector has appreciated 12.5% over the same timeframe.
The robust stock price performance can be attributed to the strong adoption of the FICO Platform and FICO Score, which led to significant growth in its clientele and driven top-line growth.
In third-quarter fiscal 2024, revenues increased 12% year over year, with Software and Scores revenues increasing 5% and 20%, respectively.
Fair Isaac Corporation Price and Consensus
Fair Isaac Corporation price-consensus-chart | Fair Isaac Corporation Quote
Nevertheless, investors should ask this question — will the robust momentum and is it the right time to invest in FICO shares? Let’s analyze.
Strong Demand for The FICO Platform to Boost the Stock
FICO is riding on the strong adoption of its FICO Scores, which remains a dominant player in the consumer credit scoring market.
The robust market position is further supported by the adoption of FICO Score 10-T for non-GSE mortgages in third-quarter fiscal 2024, covering more than $126 billion in annual originations and $380 billion in servicing. This is set to boost future revenues through enhanced credit decision-making and securitization.
FICO’s platform and SaaS services have also seen growth in third-quarter 2024, with total Annual Recurring Revenue (ARR) up 10% and platform ARR up 31%. The land and expand strategy, especially for the FICO platform, is driving this growth. Events like FICO World have also strengthened pipeline growth.
Fair Issac’s expanding clientele is noteworthy, highlighted by its partnership with Cognizant (CTSH - Free Report) to launch a cloud based real-time payment fraud prevention solution powered by FICO Falcon Fraud Manager. The collaboration is aimed at enhancing security measures and streamlining fraud detection for clients across various industries.
FICO and Cognizant’s joint offering leverages AI and machine learning to help banks and other payment service providers in North America protect their customers from fraud.
FICO’s 2024 Outlook Positive
The robust portfolio and an expanding clientele bode well for FICO’s top-line growth trajectory in 2024. Fair Issac expects total revenues of $1.7 billion for this fiscal year.
Non-GAAP earnings are expected to be $23.16 per share.
The Zacks Consensus Estimate for revenues is pegged at $1.71 billion, indicating year-over-year growth of 13.23%.
The consensus mark for fiscal 2024 earnings is pegged at $23.77 per share, declined by a couple of pennies in the past 30 days but still reflecting 20.66% year-over-year growth.
What Should Investors Do with FICO Stock?
Despite FICO’s strong portfolio and growing client base, the slowdown in mortgage origination due to rising interest rates and intense competition in the Score and Software segments is expected to impact FICO’s top-line growth in 2024.
In terms of the forward 12-month Price/Sales ratio, FICO is trading at 26.23X, higher than its median of 20.20X and the Zacks Computers - IT Services sector’s 10.51X reflecting a stretched valuation.
FICO currently carries Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point in the stock.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.