Fair Isaac stock price target raised to $1,950 by Needham

Investing.com - Needham has raised its price target on Fair Isaac (NYSE:FICO) to $1,950.00 from $1,575.00 while maintaining a Buy rating on the stock. According to InvestingPro data, six analysts have recently revised their earnings estimates upward, with analyst targets ranging from $1,364 to $3,700.

The price target adjustment comes following the Federal Housing Finance Agency’s (FHFA) announcement last week that VantageScore 4.0 can now be accepted by Fannie Mae (OTC:FNMA) and Freddie Mac (OTC:FMCC), which caused FICO shares to pull back. The stock is now trading near its 52-week low, despite maintaining impressive gross profit margins of 80.8% and showing strong revenue growth of 14.7% over the last twelve months.

Needham believes the stock decline reflects investor concerns about the end of the "FICO monopoly," but the firm remains confident that Fair Isaac can achieve 20%+ EPS growth as its base case moving forward.

The research firm cited several potential levers available to Fair Isaac, including auto scores pricing, increased stock buybacks, and streamlining G&A expenses in parts of the software business.

Fair Isaac remains on Needham’s Conviction List, with the firm’s valuation analysis suggesting a "heavily favorable risk-reward" at current levels.

In other recent news, Fair Isaac Corporation has been the subject of several analyst reports and regulatory updates. BofA Securities removed Fair Isaac from its US 1 List, although the company retains its Buy rating. Meanwhile, BMO Capital initiated coverage with an Outperform rating and set a price target of $2,000, citing strong margins and potential recovery in industry volumes. Wells Fargo (NYSE:WFC) adjusted its price target to $2,300 from $2,600 due to concerns over regulatory changes in mortgage credit scoring, yet maintained an Overweight rating. Goldman Sachs reiterated a Buy rating with a $2,244 price target, noting potential competition from VantageScore 4.0 but emphasizing that FICO’s established market presence remains a positive factor. Raymond (NSE:RYMD) James also maintained its Outperform rating, setting a price target of $2,230, and highlighted the continued use of FICO scores in the mortgage-backed security ecosystem. The Federal Housing Finance Agency’s recent policy change allows lenders to use VantageScore 4.0 for mortgages, which could introduce new competition but also maintains the tri-merge requirement beneficial to Fair Isaac. Despite these developments, analysts generally agree that Fair Isaac’s market position remains strong due to its deep integration in existing lending systems.

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