Latest news with #FairIsaac
Yahoo
3 days ago
- Business
- Yahoo
Jim Cramer and Wall Street Are Bullish on Fair Isaac Corporation (FICO)
We recently published a list of . In this article, we are going to take a look at where Fair Isaac Corporation (NYSE:FICO) stands against other stocks on Jim Cramer and Wall Street's radar. Discussing Fair Isaac Corporation (NYSE:FICO) at the end of April, Cramer made the following comments: 'Now we're back on familiar ground with number 17, a company we've had on the air. It's called Fair Isaac, up 5,732% in the Mad Money era. These guys are the keepers of FICO… Okay, they provide businesses with all sorts of software and services to help them manage credit risk. Fair Isaac Corporation (NYSE:FICO) creates software and analytics tools that help businesses automate and improve decision-making. The company provides credit scoring and advanced decision management solutions for various industries. On May 28, Baird upgraded FICO to Outperform from Neutral and set a price target of $1,900, lowered from $2,021. The recent drop in shares, driven by shifting views on regulatory risk, has brought FICO's valuation to a level that offers strong long-term growth potential with less downside risk. The analyst praised FICO Scores as the best financial model they've seen and highlighted the company's strong market position and systemic value. Baird expects Fair Isaac (NYSE:FICO) to manage pricing changes for Scores and foresees a return to normal mortgage volumes. While there are regulatory risks, they are now fairly reflected in the stock price and appear manageable. READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at Insider Monkey. Error in retrieving data Sign in to access your portfolio Error in retrieving data
Yahoo
5 days ago
- Business
- Yahoo
1 Amazing Artificial Intelligence (AI) Stock Down 88% You'll Wish You'd Bought on the Dip in 2025
Upstart developed a unique artificial intelligence (AI) algorithm that could make traditional loan assessment methods obsolete. Upstart CEO Dave Girouard thinks the world's $25 trillion in annual loan originations could be assessed entirely by AI within the next decade. Upstart is leading that revolution, and its stock looks very attractive at the current price. 10 stocks we like better than Upstart › Upstart Holdings (NASDAQ: UPST) developed an artificial intelligence (AI) algorithm to originate loans on behalf of banks and financial institutions, and it appears to be far more effective at determining the creditworthiness of potential borrowers than traditional assessment methods. Upstart stock has nearly doubled over the past year, but it remains 88% below its all-time high, which was set during the tech frenzy in 2021. Demand for loans plummeted when interest rates soared in 2022 and 2023, which dealt a blow to the company's financial performance. But earlier this month, Upstart reported its financial results for the first quarter of 2025 (ended March 31), and they revealed extremely strong -- and accelerating -- revenue growth. Its stock is starting to look like a bargain, so here's why investors might wish they had bought the dip when they look back on this moment in the future. Fair Isaac's FICO credit scoring system has been central to the banking industry's assessment methods for over three decades. It uses five key metrics to determine a potential borrower's creditworthiness, including their existing debts and their repayment history, but Upstart thinks it's outdated. AI makes it possible to analyze high volumes of data in a matter of seconds, enabling Upstart's algorithm to consider over 2,500 metrics on every applicant. As a result, the company says it produces a more accurate overview of a borrower's ability to repay their loan. It approves double the number of applications than traditional assessment methods, and at a much lower average interest rate, while maintaining the same risk profile. Inside a traditional bank, it would take a human assessor days, if not weeks, to manually analyze as much data as Upstart's AI algorithm. The company is slowly phasing humans out of the process entirely -- during the first quarter of 2025, it originated 240,706 loans in total, and a staggering 92% of those approvals were fully automated thanks to AI. The bulk of Upstart's originations are unsecured personal loans, but it has a growing presence in automotive loans and also in the home equity line of credit (HELOC) segment. At the company's "AI Day 2025" earlier this month, CEO Dave Girouard hinted at a potential expansion into small business loans, industrial loans, and credit cards over the long term. Girouard said there are around $25 trillion worth of originations worldwide each year across all loan segments, which translates into a $1 trillion opportunity in terms of fee revenue. He believes all human assessment methods will be replaced by AI within the next decade, and since Upstart is leading the transformation, it could capture a sizable chunk of that value. Upstart generated $213 million in total revenue during the first quarter of 2025. It was a 67% increase from the same quarter in 2024, marking the fastest growth rate in around three years. It was also the third consecutive quarter in which that growth rate accelerated, highlighting the significant momentum in loan demand. As I mentioned earlier, Upstart originated 240,706 loans during the quarter. They had a face value of $2.1 billion, which was a whopping 89% jump compared to the value of the loans the company originated in the same quarter last year. That growth rate also accelerated for the third straight quarter. Upstart also made significant progress at the bottom line because its operating expenses only increased by 11.6%, which was a much slower pace than the increase in its revenue. The company still lost $2.4 million on a generally accepted accounting principles (GAAP) basis, but that was a 96.2% reduction from the $64.6 million net loss it delivered in the year-ago quarter. Upstart's preferred measure of profitability is adjusted earnings before interest, tax, depreciation, and amortization (EBITDA), which is a non-GAAP metric. It excludes one-off and non-cash expenses like stock-based compensation, so it's a good indicator of the actual cash the business is generating. It was positive to the tune of $42.5 million during the quarter, which was a big swing from the loss of $20.3 million from the year-ago period. When Upstart stock peaked in 2021, its price-to-sales (P/S) ratio surged to around 50, which was a completely unsustainable valuation. But the 88% decline in the stock since then, combined with the company's rapid revenue growth, has pushed its P/S ratio down to 5.7. That's a 35% discount to its long-term average of 8.8 dating back to when Upstart went public in 2020. Plus, management's guidance suggests the company will deliver a record $1.01 billion in revenue during the 2025 full year, which places the stock at a forward P/S ratio of 4.2: In other words, Upstart stock would have to double by the end of this year just to trade in line with its long-term average P/S ratio of 8.8. Considering the company's accelerating revenue growth, I think that's a real possibility. The decline in interest rates at the end of 2024 was a big tailwind for Upstart's business in the first quarter of 2025. Wall Street is anticipating two more cuts from the Federal Reserve this year (according to the CME Group's FedWatch tool), which should drive even more demand for loans. But the opposite is also true -- if the Fed cuts rates slower than expected, Upstart's recent momentum could temporarily hit a wall. But investors should stay focused on the long-term opportunity at hand, because if the number of loans assessed by AI continues to grow as CEO Dave Girouard expects, then Upstart stock could be poised for substantial upside over the next decade. Before you buy stock in Upstart, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Upstart wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $653,389!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $830,492!* Now, it's worth noting Stock Advisor's total average return is 982% — a market-crushing outperformance compared to 171% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 19, 2025 Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Upstart. The Motley Fool recommends CME Group and Fair Isaac. The Motley Fool has a disclosure policy. 1 Amazing Artificial Intelligence (AI) Stock Down 88% You'll Wish You'd Bought on the Dip in 2025 was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
CNBC
28-05-2025
- Business
- CNBC
Baird upgrades credit scoring stock after plunging on regulatory concern
Regulatory risks looming over Fair Isaac are overblown, according to Baird. The investment firm upgraded the credit scoring firm to outperform from neutral. Analyst Jeffrey Meuler did lower his price target to $1,900 from $2,021, but that still points to 26% upside. Shares of Fair Isaac have tumbled 24% this year, as the company faces pressure from Federal Housing Finance Agency director Bill Pulte, who has expressed disappointment over the company's rising costs to pull credit reports. FICO YTD mountain FICO YTD chart That said, Meuler thinks Fair Isaac shares are now attractively valued. "We were concerned with its valuation/expectations and risks to its ongoing aggressive price realization relative to what the market seemed to be discounting," he added. "We believe the pullback makes both upside potential and magnitude of downside risk more attractive from here." Meanwhile, the company's business model remains solid. Not only are FICO scores an industry-standard consumer credit risk metric, but they are also deeply embedded in end markets, making switching a costly and time-consuming endeavor. "We consider FICO Scores the best financial model we've seen, think it has a very attractive market position and provides systemic value, believe it will continue to plan to manage to Scores pricing increases, and we expect material eventual mortgage volume normalization/recovery," Meuler wrote. While regulatory risks are certainly a threat to keep in mind, Meuler added that they are now much better priced in. More importantly, regulating Fair Isaac's pricing would likely require new legislation, which is a "low-probability potential outcome." Additionally, the company could begin to see growth opportunities in other segments. "Outside mortgage, FICO Scores costs are low, and it may be in the early stages of more aggressive price realization in Auto, with plans to increase Scores monetization elsewhere in coming years," Meuler wrote.
Yahoo
23-05-2025
- Business
- Yahoo
Why Fair Isaac Plunged Over 20% This Week
Fair Isaac dominates credit scoring. However, last year's price increases were called into question by the current FHFA director. In addition, the director questioned the need for three separate credit scores from all the credit bureaus on mortgage applications. 10 stocks we like better than Fair Isaac › Shares of credit scoring giant Fair Isaac (NYSE: FICO) slumped 21.9% this week through Friday at 2:10 p.m. ET, according to data from S&P Global Market Intelligence. Fair Isaac didn't release any financials this week, but its underperformance came after Federal Housing Finance Agency (FHFA) Director Bill Pulte made critical comments over recent FICO price increases, along with announcing a review of the need to pull credit reports from all three credit bureaus. Lower prices and volumes of credit reports would obviously be bad for FICO, if any such changes were implemented. Last November, Fair Isaac announced it would be raising its wholesale price on credit scores for mortgage applications from $3.50 to $4.95. But this week on X, Pulte was critical of FICO's recent price increases, while questioning the transparency around inconsistent prices increases for some credit reports from the three major credit bureaus in the recent past. In addition, Pulte also said his agency would be reviewing the need for "tri-merged" scores on mortgage applications, which take credit scores from all three major credit bureaus, while investigating a potential switch to "bi-merged" scores, which would only use two. Since the major credit bureaus use FICO scoring models with their own weightings along with other models, a lower volume of credit scores needed for bi-merged reports could affect FICO's volume. It should be known that while the announcement was definitely a cautionary bit of news, mortgages are only one type of loan, and FICO scores are used for a wide range of credit. Furthermore, Fair Isaac does other things besides scoring, as it sells software and analytics services, too. Those non-scoring businesses made up about 40% of revenue last quarter. Meanwhile, sell-side analyst Surinder Thind from Jefferies also noted that even if bi-merged scoring were adopted, FICO's earnings per share may only be affected by about 16%, at most. Therefore, he advocated buying the dip this week. FICO has been a long-term winner, with a high-margin business and annuity-like revenue stream. If this week's threats only turn into mild changes, the pullback could be an opportunity. Before you buy stock in Fair Isaac, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Fair Isaac wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $640,662!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $814,127!* Now, it's worth noting Stock Advisor's total average return is 963% — a market-crushing outperformance compared to 168% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 19, 2025 Billy Duberstein and/or his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Jefferies Financial Group. The Motley Fool recommends Fair Isaac. The Motley Fool has a disclosure policy. Why Fair Isaac Plunged Over 20% This Week was originally published by The Motley Fool
Globe and Mail
23-05-2025
- Business
- Globe and Mail
Treasury Yield Spike: Why This Could Be Bad for Your Portfolio
In this video, I will talk about the spike in U.S. Treasury yields, the recent drop in FICO (NYSE: FICO) stock, and OpenAI's acquisition of Jony Ive's company. Watch the short video to learn more, consider subscribing, and click the special offer link below. *Stock prices us ed were from the trading day of May 21, 2025. The video was published on May 22, 2025. Should you invest $1,000 in Fair Isaac right now? Before you buy stock in Fair Isaac, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Fair Isaac wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $644,254!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $807,814!* Now, it's worth noting Stock Advisor 's total average return is962% — a market-crushing outperformance compared to169%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of May 19, 2025 Neil Rozenbaum has no position in any of the stocks mentioned. The Motley Fool recommends Fair Isaac. The Motley Fool has a disclosure policy. Neil is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.
