FICO Shares Fall 8% After Federal Housing Finance Agency Criticism

Shares of Fair Isaac Corporation (FICO) have suffered significant declines recently, dropping as much as 20% in some instances following comments by the Federal Housing Finance Agency (FHFA) director expressing concerns about FICO's pricing and suggesting changes to credit report formats. Despite these regulatory concerns, analysts and brokerage firms largely maintain a positive outlook on FICO, with an average 'Outperform' rating and price targets implying potential upside ranging from approximately 12% to over 30%. Jefferies and BofA analysts view the regulatory scrutiny as short-term noise, emphasizing that FICO's credit-scoring fees represent a minor portion of mortgage closing costs and that the company is poised to continue growing its economic share in the mortgage market. GuruFocus estimates suggest a possible downside based on GF Value calculations, indicating some valuation risk compared to current prices. Overall, the consensus among analysts is that the recent stock pullback offers a buying opportunity, supported by expectations of FICO's ongoing financial strength, including strong free cash flow and share repurchase activity. Market reactions have also contributed to broader U.S. equity fluctuations, with FICO's share price drop being among the largest in the S&P 500 on affected trading days.