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

Needham analyst Kyle Peterson reiterated a Buy rating on the shares of Fair Isaac Corporation FICO, raising the price target to $900 from $855.

The analyst believes the company's platform software business has a "massive growth runway", aided by solid demand from global enterprise banks despite the macro uncertainty. 

Peterson also remains confident in FICO's ability to grow the Scores business given its dominant market share and a high degree of pricing power, given the low price of the FICO score relative to the value it provides to lenders.

The analyst views FICO's platform software solutions as core and non-discretionary, as they help global enterprise banks accelerate their digital transformation efforts.

The analyst notes that FICO can drive sustained growth and profitability in the coming years through ample pricing power in the Scores business and the building momentum/long runway for the software business.

Going ahead, the company will be able to supplement these growth perspectives with a steady cadence of share repurchases and sustainable, low double-digit EPS growth over the long term. 

Due to the high-margin nature of FICO's scores revenue, the analyst raised FY24 EPS outlook to $22.90 (from $21.60). The company's Scores revenue growth estimate for FY24 has been raised to 10% (from 7.3%).

Price Action: FICO shares are trading higher by 1.3% to $766.99 on the last check Thursday.

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