BofA warns Fed risks policy mistake with early rate cuts
Investing.com - BMO Capital initiated coverage on Fair Isaac (NYSE:FICO) with an Outperform rating and a $2,000 price target on Wednesday, joining a range of analyst targets spanning from $1,364 to $3,700.
The research firm highlighted Fair Isaac’s business quality, noting the company maintains approximately 90% margins on its Scores business, where it has been implementing significant price increases. This aligns with the company’s impressive overall gross profit margin of 80.83%, according to InvestingPro data.
BMO Capital acknowledged that the stock has weakened following commentary from the Federal Housing Finance Agency (FHFA) Director in May and July of this year.
Despite these concerns, BMO Capital sees further upside potential for Fair Isaac shares, citing an expected recovery in industry volumes.
The firm also noted its expectation of a deceleration in pricing for fiscal year 2026, according to BMO estimates.
In other recent news, Fair Isaac Corporation has announced plans to launch two new credit scoring models incorporating buy now, pay later (BNPL) data, scheduled for release in Fall 2025. This development marks the first major credit scoring provider to include BNPL loan data, aiming to offer lenders a more comprehensive view of consumer repayment behaviors. Meanwhile, Wells Fargo (NYSE:WFC) has adjusted its price target for Fair Isaac to $2,300 from $2,600, maintaining an Overweight rating due to concerns about potential regulatory changes in mortgage credit scoring. The adjustment follows an announcement that government-sponsored enterprises will accept VantageScore 4.0, although it’s unclear if the FICO mandate has been removed for conforming mortgages.
Goldman Sachs reiterated its Buy rating on Fair Isaac with a $2,244 price target, noting that the FHFA’s decision to allow VantageScore 4.0 could increase competition but believes most lenders will continue using FICO scores. Raymond (NSE:RYMD) James also maintained its Outperform rating with a $2,230 price target, highlighting the existing tri-merge requirement as a positive factor for Fair Isaac. In addition, Baird upgraded Fair Isaac’s stock rating from Neutral to Outperform, adjusting the price target to $1,900, citing the current valuation as an opportunity for investors amid regulatory risks. These developments reflect the ongoing changes and challenges in the credit scoring market, with Fair Isaac continuing to adapt its strategies in response to evolving industry dynamics.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.