TLDR
- BofA Securities downgraded FICO to Neutral from Buy, slashing its price target to $700 from $1,400.
- The downgrade follows a Federal Housing Finance Agency decision putting VantageScore 4.0 on the same pricing grid as Classic FICO.
- FICO stock has fallen roughly 60% year-to-date and trades near its 52-week low.
- Competitor TransUnion locked in $0.99 VantageScore pricing through 2028, adding pressure on FICO.
- Despite the drop, FICO still trades at a P/E of 17.8 and an 85% gross margin.
BofA Securities cut its rating on Fair Isaac (FICO) to Neutral from Buy this week. The firm also lowered its price target sharply, from $1,400 down to $700.
The move came after a regulatory shake-up in the mortgage scoring world. Federal Housing Finance Agency Director Bill Pulte announced that Fannie Mae and Freddie Mac will now use a single pricing grid for loans.
That grid treats VantageScore 4.0 and Classic FICO equally. Previously, VantageScore carried a 20-point deduction to reflect its typically higher scores compared to FICO.
What Changed for FICO
Removing that gap matters. It takes away a pricing edge FICO had held over its rival scoring model for years.
BofA said the new grid adds risk to FICO’s score volumes, pricing power, and market share going forward. The firm also flagged that heavy regulatory scrutiny could limit how much FICO can raise its headline score prices.
Two pending initiatives, FICO 10T and the Direct Lender Program, still await regulatory approval. Both were seen as potential new revenue levers for the company.
The stock reaction was swift. FICO shares fell 20% in premarket trading after the FHFA announcement.
Rival TransUnion then added to the pressure. The company said it will hold its standalone VantageScore 4.0 mortgage pricing at just $0.99 per score through December 2028, locking in cost certainty for lenders.
That combination made for one of FICO’s biggest single-day moves in recent memory. The stock has seen 31 moves greater than 5% over the past year, but this one stood out.
The Numbers So Far
FICO now trades near $654.71 per share. That’s about 65% below its 52-week high of $1,880, set back in October 2025.
Year-to-date, the stock is down roughly 60%. Over the past week alone, it has dropped close to 30%.
This isn’t the first blow this month. Twenty-five days ago, FICO fell 15% after the FHFA first approved VantageScore 4.0 for all lenders originating Fannie Mae and Freddie Mac loans.
Despite the selloff, some numbers still look solid. FICO carries a P/E ratio of 17.8 and a PEG ratio of 0.48.
Its gross profit margin sits at 85%. Some analysts on InvestingPro list FICO among undervalued names given these figures.
Not every analyst has turned bearish. Jefferies kept a Buy rating with a $1,675 price target, while Mizuho maintains Outperform at $1,344.
Raymond James also held its Outperform rating, setting a target of $1,750 but flagging ongoing headline risk. Barclays trimmed its target from $1,950 to $1,700 while keeping an Overweight rating.
Rocket Mortgage has already adopted VantageScore 4.0 as its preferred model for eligible mortgages. Equifax and TransUnion shares also declined following the FHFA’s broader VantageScore approval, though FICO’s drop has been the steepest of the three.
Long-term holders have still come out ahead. A $1,000 investment in FICO shares five years ago would be worth about $1,638 today, even after this month’s declines.
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