Goldman Sachs analyst George Tong has reiterated their bullish stance on FICO stock, giving a Buy rating today.
George Tong’s Buy rating for Fair Isaac Corporation (FICO) stems from a robust forecast for the company’s revenue and EPS growth in the Scores and Software segments for fiscal year 2024. Despite a first-quarter report that showed mixed results, including a deceleration in revenue growth due to challenging comparisons to the previous year’s licensing deal and the timing of Software deal closures, FICO’s overall revenue outlook for the full year has not changed. The company is expected to maintain double-digit revenue growth, supported by consistent credit volume trends, with particular strength seen in mortgage refinancing, and balanced conditions in other areas such as subprime card originations and auto loan originations.
Additionally, the Software segment’s Annual Recurring Revenue (ARR) is growing strongly, driven by new client acquisitions and increased usage by existing clients. Looking ahead, a key factor in FICO’s revenue boost is anticipated to be the revised Scores rate card for fiscal 2024, which will introduce at least Consumer Price Index (CPI) level price increases in non-mortgage areas, starting in the second quarter. Tong also predicts an annual EPS growth of 15-20%, propelled by significant stock buybacks funded by free cash flow, a factor likely to contribute to the stock’s performance. This growth, combined with the expectation that FICO will outperform its full-year guidance, solidifies the rationale for the Buy recommendation.
According to TipRanks, Tong is a 4-star analyst with an average return of 5.2% and a 57.87% success rate. Tong covers the Industrials sector, focusing on stocks such as Equifax, Cintas, and TransUnion.
In another report released today, Barclays also maintained a Buy rating on the stock with a $1,500.00 price target.
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Fair Isaac (FICO) Company Description:
Fair Isaac Corp. engages in the provision of decision management solutions. It operates through the following segments: Applications, Scores, and Decision Management Software. The Applications segment includes decision management applications designed for a type of business problem or process such as marketing, account origination, customer management, fraud, collections, and insurance claims management. The Scores segment consists of business-to-business scoring solutions and services, business-to-consumer scoring solutions and services including myFICO solutions for consumers, and associated professional services. The Decision Management Software segment comprises the analytic and decision management software tools, FICO decision management suite, and associated professional services. The company was founded by Bill Fair and Earl Isaac in 1956 and is headquartered in San Jose, CA.
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