FICO Surges 2.35% on FHFA's FICO 10T Adoption and Strong Earnings, Ranks 202nd in $500M Trading Volume

Market Snapshot

On November 11, 2025, Fair Isaac (FICO) closed with a 2.35% gain, marking a significant rise in a market where its $0.50 billion trading volume ranked it 202nd in terms of activity. The stock’s performance outpaced broader sector trends, driven by a confluence of strategic developments and analyst optimism. Despite a 12.6% year-to-date decline, the day’s rally reflected renewed investor confidence in the company’s positioning in the credit scoring landscape and its financial strength.

Key Drivers

The primary catalyst for FICO’s upward move was the Federal Housing Finance Agency’s (FHFA) imminent decision to adopt the FICO 10T credit scoring model. FHFA Director Bill Pulte highlighted the model’s potential to enhance consumer benefits and mortgage market stability by incorporating alternative data sources such as rent payment history. This development has positioned FICO as a key player in reshaping credit assessment standards, with Goldman Sachs and other analysts reiterating Buy ratings and raising price targets. Goldman Sachs, for instance, set a $2,070 price target, citing FICO 10T’s superior predictive accuracy compared to competing models like VantageScore 4.0.

The company’s robust financial performance further underpinned the rally. FICO reported Q4 2025 earnings exceeding expectations, with a $7.74 EPS and $516 million in revenue—$3 million above forecasts. Its Scores segment, which accounts for most of its profits, drove growth, while strong margins (47% operating and 32.75% net) underscored operational efficiency. These metrics align with the company’s long-term strategy, as highlighted in analyst reports, which emphasized its 15.7% three-year revenue growth and $770 million in free cash flow over the past year.

However, the stock’s valuation remains elevated, trading at a P/E ratio of 66x earnings. This premium reflects high institutional ownership (87.12%) and analyst confidence but also raises questions about sustainability. Goldman Sachs and BMO Capital acknowledged this in their recent ratings, with BMO lowering its price target to $2,200 while maintaining an Outperform rating. The divergence in analyst targets—ranging from $2,070 to $2,300—signals a balance between optimism over FICO 10T’s adoption and concerns about near-term execution risks, particularly in the Software segment, which has faced challenges.

A secondary but notable factor was the competitive dynamics in the credit scoring industry. As FICO 10T gains traction, rivals such as Equifax (EFX) and TransUnion (TRU) saw declines, reflecting market sentiment that FICO’s dominance could intensify. The model’s pricing parity with existing offerings (Classic FICO) and its early-adopter program—offering FICO 10T at no additional cost to lenders—have accelerated adoption, particularly in non-conforming mortgage markets. Goldman Sachs noted that six of the top ten lenders already use the model, anticipating its expansion to conforming markets once FHFA finalizes the agreement.

Despite the positive momentum, risks remain. Insider selling activity, with four transactions totaling 18,032 shares over the past three months, raised some caution. While the Altman Z-Score (9.49) and Beneish M-Score (-2.58) indicate strong financial health, the company’s beta of 1.37 highlights its volatility relative to the broader market. Analysts also flagged regulatory uncertainties and potential margin pressures if the Software segment’s performance does not improve.

In summary, FICO’s 2.35% gain was fueled by the FHFA’s endorsement of its next-generation credit scoring model, strong earnings, and a favorable competitive position. While valuation concerns persist, the company’s innovative edge and strategic partnerships suggest a constructive outlook, provided execution risks are mitigated. Investors will likely monitor the FHFA’s final decision and the Software segment’s trajectory as key inflection points.