Fair Isaac Fairly Capable To See Further Upside Thanks To Competitive FICO Score Business: Analyst

Raymond James analyst Patrick O'Shaughnessy initiated coverage on Fair Isaac Corp FICO with an Outperform rating and a price target of $1,007.

Although FICO's shares have performed well over the past year, the analyst sees further upside and thinks strong execution in the Software segment can boost long-term revenue and margin.

The analyst notes FICO's efforts to provide free FICO scores to consumers have boosted its brand.

Also, the analyst says the company enjoys significant entry barriers, and recent regulatory decisions have structurally ingrained FICO into the mortgage ecosystem and built the FICO Score as a market leader.

O'Shaughnessy also sees FICO's focus on transitioning its Software business to a SaaS-based revenue model as the growth driver. 

Moving forward, the analyst expects favorable secular tailwinds to support the company's land-and-expand strategy and Platform Software revenues to account for a larger share of the Software business. 

Consequently, the analyst anticipates expansion in SaaS and Platform Software revenues to drive segment adjusted EBITDA margin expansion.

O'Shaughnessy estimates adjusted EPS of $20.01 in FY23, $24.55 in FY24, and $30.15 in FY25.

Also Read: FICO Poised For Sustained Growth With Dominant Market Share And Digital Transformation Solutions: Analyst

Price Action: FICO shares are trading higher by 1.71% at $908.00 on the last check Wednesday.