Fair Isaac is Wednesday's IBD Stock Of The Day as the credit-scoring services firm and S&P 500 component broke out above a buy point ahead of reporting fiscal fourth-quarter earnings and revenue after the market closed Wednesday.
Montana-based Fair Isaac is an analytics software company, best known for its FICO score — a measure of consumer credit risk used by consumer lenders in the U.S. The company's two operating segments are "scores" and "software."
FICO's software business segment includes services such as account origination, customer management, customer engagement, fraud detection, financial crimes compliance and other professional services.
Fair Isaac reported Q4 earnings grew 30.5% to $6.54 per share with revenue coming in at $454 million, up 16% compared to a year ago. Analysts predicted EPS of $6.36 and sales totaling $448 million, according to FactSet.
For the full fiscal year, Fair Isaac saw EPS jump 20% to $23.74 on $1.72 billion in sales. The company expected earnings of $23.16 and analyst consensus had 2024 EPS at $23.55 per share with $1.71 billion revenue.
Analyst consensus has solid EPS growth over the next four fiscal years, with earnings expected to reach $54.05 per share in 2028, according to FactSet.
S&P 500: FICO Stock Action
Fair Isaac advanced 3.7% to 2,084.45 during Wednesday's market action, flashing a buy signal from clearing the Oct. 30 high of 2,034.46 and extending a bounce from the 21-day line.
FICO stock is in a three-weeks-tight pattern, according to MarketSurge charts. The traditional tight buy point is 2,103.70, but Wednesday's move gets above the bulk of trading. Shares are on track to set a record close.
However, investors should be cautious about buying a stock on the cusp of earnings, unless using an options strategy.
FICO Is Long-Term Leader
The S&P 500 stock is in the IBD Long-Term Leaders portfolio. The hallmarks of Long-Term Leaders are stocks with steady, long-term outperformance with solid, steady earnings growth.
FICO stock has gained about 79% in 2024, a top-20 performer in the S&P 500. The stock has also booked six consecutive monthly advances, dating back to the end of April. The S&P 500 component is up 5% in November, working on its seventh straight monthly gain.
The earnings stability rating is a six, with the scale running from 1-to-99. Low ratings signal exceptionally stable earnings growth over time.
Analyst Action
On Oct. 1, UBS initiated coverage of FICO with a neutral rating and $2,100 price target. Meanwhile, Oppenheimer analysts in early October raised the firm's price target on FICO to $2,109, up from $1,967, with an outperform rating.
Wells Fargo analyst Jason Haas in October also hiked the firm's price target on FICO to $2,200 from $2,100 and added the stock to its "Q4 Tactical Ideas List." The firm estimates a nearly $200 million fiscal 2025 pricing benefit if FICO takes the price it charges to get a mortgage score price to $5, up from $3.50 now, with upside from pricing in auto and card.
FICO stock has a 92 Composite Rating out of a best-possible 99. The S&P 500 component also has a 95 Relative Strength Rating and a 95 EPS Rating.
Please follow Kit Norton on X @KitNorton for more coverage.
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