Fair Isaac (FICO) Rides on Solid Portfolio, Expanding Clientele
Fair Isaac FICO shares have been on a bull run, thanks to a robust portfolio and an expanding clientele. In the trailing 12 months, the company’s shares have moved up 100.4%, outperforming the Zacks Computer & Technology’s return of 45.3%.
FICO is benefiting from the strong adoption of its FICO Scores. The most updated scores — FICO Score 10 and 10 T — were launched by Fair Isaac in January 2020, while FICO Score 9 and FICO Score 8 are the most distributed scores currently.
FICO’s Score business remains a dominant player in the consumer credit scoring market, as evident from an expanding clientele. Per data from Javelin Strategy & Research, asset-backed securitizations across seven collateral classes (Auto Leasing, Subprime Auto, Prime Auto, Student Loans, Time Shares, Consumer Finance, and Credit Cards) rely heavily on FICO Scores.
Recently, CrossCountry Mortgage (“CCM”), the nation’s number three retail mortgage lender, adopted FICO Score 10 T. CCM will use FICO Score 10 T to support origination and decision-making for non-confirmingloans. Moreover, exclusively based on FICO Score 10T, CCM has committed to issuing mortgage-backed securities.
FICO Score 10 T offers greater precision in making lending decisions. FICO Score 10 T can enable an increase in mortgage originations of up to 5% (without taking on additional credit risk) or reduce default risk and losses by up to 17%.
Fair Isaac Corporation Price and Consensus
Fair Isaac Corporation price-consensus-chart | Fair Isaac Corporation Quote
FICO Platform Gaining Traction
Fair Isaac's enhancements to the FICO Platform Power Customer Connections earlier in 2023 enabled enterprise-wide transformation. It improved the customer experience with hyper-personalization and significantly boosted enterprise transformation success rates.
Recently, FICO announced more than 20 enhancements to the FICO platform that allow enterprises to integrate data and analytics into operational decision-making strategies. This is expected to boost the adoption rate in recent times.
Fair Isaac has been benefiting from the strong adoption of the FICO Platform in recent times. StepChange recently adopted the FICO Platform to assess individuals in debt. The microservice-oriented design of the FICO Platform is a more manageable approach that fits effectively with StepChange's new IT environment.
The FICO Platform enables StepChange to import more data sets than its legacy system can manage, hence boosting consumer advice. It is also user-friendly, which reduces StepChange’s training requirements.
Leading Indian banks, including HDFC Bank, Axis Bank and AU Small Finance, have adopted the FICO Platform.
The expanding clientele is expected to boost top-line growth of the company in 2024. Fair Issac expects total revenues of $1.68 billion for the next year. The Zacks Consensus Estimate for revenues is pegged at $1.69 billion, indicating year-over-year growth of 11.9%.
Zacks Rank & Other Stocks to Consider
Fair Isaac currently has a Zacks Rank #2 (Buy).
DigitalOcean DOCN, BlackLine BL and Meta Platforms META are some other top-ranked stocks that investors can consider in the broader sector, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
DOCN, BL and META shares have returned 4.2%, 40.1% and 169.7%, respectively, in the past 12 months.
Long-term earnings growth rates for DigitalOcean, BlackLine and Meta Platforms are pegged at 31.26%,50.56% and 21.34%, respectively.
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