Fair Isaac Corporation

🇺🇸New York Stock Exchange
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Fair Isaac Corporation stock analysis FICO overview
Slightly Bullish +25

Is It Time To Revisit Fair Isaac (FICO) After Its Recent Share Price Recovery

📊 Fair Isaac's share price recovered 7.6% in the past week, with a current valuation around US$1,043.57.

📉 The stock has declined 36.5% year-to-date and 47.6% over the last year, indicating shifting sentiment on growth prospects.

⚖️ Fair Isaac currently carries a valuation score of 3 out of 6 based on its fundamentals relative to current pricing.

💰 A Discounted Cash Flow (DCF) model estimates an intrinsic value of about US$1,469.93 per share using a 2 Stage Free Cash Flow to Equity approach.

📈 The DCF analysis suggests the stock is undervalued by approximately 29.0% compared to the recent share price of US$1,043.57.

💵 Fair Isaac's last twelve month Free Cash Flow was about US$873.9 million, with projections reaching US$1,935.5 million by 2030.

📉 The company trades on a P/E ratio of 31.9x, which is higher than the Software industry average of 29.1x and peer average of 25.4x.

🎯 Simply Wall St's proprietary Fair Ratio suggests a tailored benchmark P/E of 35.7x, indicating shares may be trading below that specific estimate.

🧠 Investor narratives on Simply Wall St provide flexible fair value estimates ranging from a cautious US$1,118 to an optimistic US$2,500 per share.

🤝 The stock holds an average rating of "overweight" with a mean price target of US$1,515.65 according to analyst consensus data provided.

Bullish Signals
  • The stock has seen a strong 7.6% gain over the past week, indicating positive short-term momentum.
  • According to Discounted Cash Flow analysis, Fair Isaac is currently undervalued by 29.0% compared to its estimated intrinsic value of $1,469.93 per share versus a recent price of around $1,043.57.
  • The company is trading at a P/E ratio of 31.9x, which is slightly below its proprietary 'Fair Ratio' benchmark of 35.7x, suggesting potential upside.
  • Analyst projections indicate that the company's Free Cash Flow will grow significantly from $873.9 million to around $1,935.5 million by 2030.
  • Simply Wall St data shows an average rating of 'overweight' for Fair Isaac with a mean price target of $1,515.65, which is higher than the current trading price.
Risk Factors
  • Fair Isaac experienced a significant 47.6% decline in returns over the past year and 36.5% drop year-to-date, indicating shifting negative sentiment around its growth prospects.
  • The company's -47.6% return over the last year is specifically noted as lagging behind its industry peers.
  • Fair Isaac carries a valuation score of only 3 out of 6, suggesting analysts view its current pricing with significant concern compared to intrinsic value.
  • The stock trades at a P/E ratio of 31.9x, which exceeds the peer average of 25.4x and the industry average of 29.1x, raising potential overvaluation concerns despite specific Fair Ratio calculations.
  • Widely varying community narratives regarding fair value range from a cautious US$1,118 to an optimistic US$2,500, highlighting significant uncertainty and divergent analyst opinions on the stock's true worth.
Full Analysis
The article examines the recent share price recovery of Fair Isaac Corporation (FICO), noting its current price around US$1,043.57 following a 7.6% gain over the past week. Despite this short-term rebound, returns over the last year and year to date stand at 47.6% and 36.5% declines respectively, suggesting a shift in investor sentiment regarding the company's growth prospects and risk profile. The analysis indicates that while recent coverage highlights FICO's position as a key software player, the stock carries a valuation score of 3 out of 6, prompting an inquiry into whether the recovery aligns with its underlying business fundamentals or if the price still reflects opportunity. A Discounted Cash Flow (DCF) model using a Two-Stage Free Cash Flow to Equity approach estimates FICO's intrinsic value at approximately US$1,469.93 per share, based on a last twelve month free cash flow of around US$873.9 million and analyst projections reaching roughly US$1,935.5 million by 2030. This calculation suggests the stock is currently undervalued by about 29.0% compared to its recent trading price. The analysis further utilizes P/E ratios, showing FICO trades at 31.9x earnings versus a peer average of 25.4x and a proprietary Fair Ratio benchmark of 35.7x, implying the shares may be trading below their tailored valuation metric. Beyond quantitative models, the article introduces "Narratives" as a qualitative framework where investors can construct different storylines to determine fair value, ranging from a cautious view of US$1,118 per share to an optimistic outlook of US$2,500. The average rating for FICO is currently overweight with a mean price target set at US$1,515.65. Ultimately, the piece emphasizes that these valuations are based on historical data and analyst forecasts rather than acting as financial advice or a direct recommendation to buy or sell the stock.