Fair Isaac: Raising Our Fair Value Estimate but Shares Still Pricey, in Our View

After updating our model, we are increasing our fair value estimate for Fair Isaac’s shares by 18% to $1,300 per share as we increase our score revenue forecasts. First, we’ve increased our mortgage pricing assumptions. Second, we are increasing our mortgage volume assumptions for 2025 as mortgage rate expectations have declined since our last update. Fair Isaac has carved out a wide moat from its benchmark scoring business and, as a result, has strong pricing power. We’ve also slightly increased our long-term pricing assumptions—given the firm’s high incremental margins and low variable costs, price increases tend to flow to the bottom line.