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On Monday, Jefferies, a global financial services company, increased its price target for Fair Isaac Corporation (NYSE:FICO) shares, known for its credit scoring models, to $2,250 from $1,850. The firm also reaffirmed its Buy rating for the stock. The revision reflects a positive outlook on the company's performance, particularly in the context of a robust mortgage sector.
The analyst at Jefferies cited the strength of the mortgage market as a key driver for the raised third-quarter estimates for Fair Isaac, as well as for Equifax (NYSE:EFX) and TransUnion (NYSE:TRU), two other players in the credit information sector.
The estimates have been set above the guidance provided by the companies and above the general market consensus. However, Experian (OTC:EXPGF)'s estimates remain unchanged due to its relatively lower exposure to the mortgage sector.
Jefferies anticipates that both Equifax and TransUnion will likely increase their full-year guidance, considering the current market dynamics. On the other hand, while the firm expects Fair Isaac to outperform in the fourth fiscal quarter (F4Q), there is a note of caution due to the high expectations from investors regarding the company's 2025 outlook, particularly concerning business-to-business (B2B) pricing for its scoring solutions.
In addition to adjusting the near-term estimates, Jefferies has also introduced its projections for Fair Isaac for the years 2026 and 2027. The extended forecast suggests a long-term confidence in the company's growth trajectory and market position. The analyst's comments reflect a comprehensive assessment of Fair Isaac's prospects, balancing immediate performance expectations with a cautious view of investor sentiment for the coming years.
In other recent news, Fair Isaac Corporation, also known as FICO, demonstrated a strong performance in its third quarter of 2024, with revenues rising by 12% to $448 million compared to the previous year. The company's GAAP net income slightly decreased by 2% to $126 million, while non-GAAP net income rose by 9% to $156 million. FICO also reported a record free cash flow of $206 million for the quarter, marking a 69% increase from the previous year.
Analyst firms, including Wells Fargo, Oppenheimer, and UBS, have shared their perspectives on FICO's performance and future outlook. Wells Fargo has maintained its Overweight rating on FICO, with a price target increase to $2,200 from $2,100. Oppenheimer has given FICO an Outperform rating with a price target of $1,967.00, while UBS initiated coverage with a Neutral rating and a price target of $2,100.
In terms of future expectations, FICO is projecting a GAAP net income of $500 million, with earnings per share of $19.90, and a non-GAAP net income forecasted at $582 million, with earnings per share of $23.16. These recent developments reflect a positive outlook for FICO, backed by robust financial performance and analyst confidence.
InvestingPro Insights
Fair Isaac Corporation (NYSE:FICO) continues to demonstrate strong financial performance, aligning with Jefferies' optimistic outlook. According to InvestingPro data, FICO's revenue growth stands at 12.28% for the last twelve months as of Q3 2024, with an impressive gross profit margin of 79.35%. This robust financial health supports Jefferies' decision to raise the price target.
InvestingPro Tips highlight that FICO is trading near its 52-week high, with a strong return of 119.04% over the last year. This performance echoes the positive sentiment expressed in the article regarding the company's market position. Additionally, the tip noting that three analysts have revised their earnings upwards for the upcoming period aligns with Jefferies' increased estimates.
It's worth noting that FICO is trading at a high P/E ratio of 98.64, which may reflect the high expectations from investors mentioned in the article. For readers interested in a more comprehensive analysis, InvestingPro offers 15 additional tips for FICO, providing a deeper understanding of the company's financial landscape.
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