UBS maintains Neutral on Fair Isaac stock amid pricing shift

UBS has kept a Neutral rating on Fair Isaac (FICO) stock, with a price target of $942, as the company adjusts its mortgage origination pricing model. The stock is currently trading at $711, down 63% from its 52-week high of $1,858.91. Despite the stock's decline, UBS's analysis indicates the company remains undervalued. Fair Isaac shifted to bespoke mortgage pricing for individual customers in 2026, increasing mortgage royalties from 60 cents in 2022 to $10.

Analyst Kevin McVeigh highlighted the lack of visibility in the mortgage market, which could lead to further volatility. The firm noted uncertainty in an uneven macroeconomic environment, citing 10 analysts who have lowered their earnings forecasts for the upcoming period. The credit scoring industry is facing increased competition from VantageScore, which has gained market share.

Fannie Mae and Freddie Mac announced they will move to a single pricing grid, with VantageScore adopting the FICO Classic pricing grid. Fair Isaac reported fourth-quarter results that beat expectations, with non-GAAP earnings per share reaching $11.10. However, revenue slightly missed projections at $657 million. Needham reduced its price target to $925 with a Buy rating, while Wells Fargo lowered its target to $650, maintaining an Equal Weight rating.

RBC Capital downgraded Fair Isaac from Outperform to Sector Perform, cutting its price target to $770, citing challenges in the mortgage market, such as high interest rates and pricing transitions.