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On Tuesday, Raymond (NS:RYMD) James analyst Patrick O'Shaughnessy adjusted the price target for Fair Isaac Corporation (NYSE:NYSE:FICO) shares, reducing it from $2,200.00 to $2,090.00. Despite the reduction, the firm continues to hold an Outperform rating on the stock. According to InvestingPro data, analyst targets for FICO range from $1,194 to $2,661, with the stock currently trading at high valuation multiples relative to earnings and EBITDA.
O'Shaughnessy's assessment pointed to the impact of persistently high mortgage interest rates on the forecast for origination activity, prompting a revision of the firm's revenue and EPS estimates for the fiscal year 2025 and beyond. However, the analyst remains optimistic, anticipating double-digit growth in mortgage originations for FY2025. This growth is expected to be bolstered by FICO's previously announced pricing increase. The company maintains impressive gross profit margins of nearly 80% and has demonstrated strong revenue growth of 13.5% over the last twelve months.
The analyst's commentary highlighted confidence in the company's performance, suggesting that the expected growth in originations, along with the pricing strategy, could lead to results that surpass consensus estimates. Despite the challenges posed by the mortgage interest rates, the outlook for Fair Isaac is still seen as positive.
Fair Isaac, known for its credit scoring services, is considered by Raymond James to be a top-tier business. The firm's long-term perspective suggests a sustainable double-digit growth in earnings per share (EPS), which is believed to warrant a premium valuation for the company's stock. This perspective is maintained even as adjustments are made to the near-term financial projections.
In other recent news, Fair Isaac Corporation, known as FICO, has reported its financial results for the fourth quarter of 2024. The company's earnings call, led by key management figures, provided a detailed comparison of the results with those of the preceding year and quarter, offering insights into the company's performance trajectory.
FICO's Scores business, which is projected to account for 54% of its fiscal year 2024 revenues, has seen significant price increases, contributing to the acceleration of the company's revenue growth. This strategy has helped achieve a robust 13.5% revenue growth and impressive 79.7% gross profit margins in the last twelve months.
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