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Investing.com - Goldman Sachs has reiterated a Buy rating and $2,070.00 price target on Fair Isaac (NYSE:FICO) as the Federal Housing Finance Agency (FHFA) approaches an agreement to implement the company’s FICO 10T credit score model. The price target represents approximately 17% upside from the current price of $1,763.68, though InvestingPro data indicates the stock is trading at a high P/E ratio of 66x earnings.
The investment bank views the potential implementation of FICO 10T as a positive catalyst for the company, noting that the newer model demonstrates greater accuracy in credit risk assessment compared to both VantageScore 4.0 and the Classic FICO score, potentially strengthening Fair Isaac’s competitive position in the market.
FICO 10T is priced at the same level as Classic FICO across mortgage, auto, and card markets, with pricing structures varying by vertical. The company offers both performance model and per-score model pricing options in conforming and non-conforming mortgage segments, maintaining consistency with its Classic FICO offering. This pricing strategy appears effective, as Fair Isaac maintains impressive gross profit margins of 82.2% and generated nearly $770 million in free cash flow over the last twelve months.
Fair Isaac launched an early adopter program approximately one year ago, providing FICO 10T at no additional cost to lenders who purchase Classic FICO for mortgage use. The program has gained significant traction in the non-conforming market, with six of the top ten lenders currently participating.
Goldman Sachs expects lenders already utilizing FICO 10T in non-conforming markets to expand its use to conforming markets once Government Sponsored Enterprises formally implement the new scoring model.
In other recent news, Fair Isaac Corporation reported its fourth-quarter earnings for 2025, exceeding analysts’ expectations with an EPS of $7.74, compared to the forecasted $7.34. The company’s revenues also surpassed predictions, reaching $516 million against the anticipated $513.21 million. This strong performance was largely attributed to significant growth in its Scores segment and strategic innovations. Despite the positive earnings, Jefferies adjusted its price target for Fair Isaac to $2,100 from $2,150, citing challenges in the company’s Software segment while maintaining a Buy rating. Similarly, BMO Capital lowered its price target to $2,200 from $2,300 but kept an Outperform rating. Additionally, Fair Isaac repurchased approximately $550 million in shares during the fourth quarter, setting a new quarterly record for the company. These developments provide investors with a detailed look at Fair Isaac’s recent financial activities.
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