FICO · FAIR ISAAC CORPORATION · PUBLIC EQUITY RESEARCH
Exceptional Franchise. Insufficient Return at $1,123.
WATCH / NO POSITION AT THE REFERENCE PRICE
Research verdict—not the author’s personal holdings disclosure.
Research frozen as of July 31, 2026 · Decision memo dated August 19, 2026
FICO is an exceptional franchise, but expected per-share compounding from the reference price is insufficient. This is not a short thesis: the company retains substantial earnings power, and the downside is highly sensitive to the terminal multiple.
59-page PDF · one-page memo first
Decision math
Required return
15.0%
Constant-multiple case
9.1%
Formal Base
5.25%
At the $1,122.97 reference price, the Base case fails the return hurdle before assuming competitive erosion or multiple compression.
What this research contributes
01
Step versus slope
FY2026 mortgage repricing raised FICO’s earnings base. It did not, by itself, create a recurring growth engine.
02
The Six Gates
Regulatory approval, system availability, lender adoption, GSE delivery, lenders stopping paid FICO pulls, and FICO revenue loss are separate gates. Delivery is not payment.
03
The Double Gate
The Base case does not meet a 15% annualized return hurdle. The Bear case sizes partial bi-merge severity while making the terminal-multiple sensitivity explicit.
What would change the view
Another material pricing step retained in reported economics
Earnings materially above the Base path
A mortgage-reporting outcome that removes or intensifies the modeled score-count downside
A sufficiently lower share price, which could change the investment decision without changing the operating thesis
Methodology and boundaries
The report distinguishes disclosed facts [F], management or named-participant statements [M], author derivations [I], model assumptions [A], and structurally unavailable evidence [U]. The underlying model, evidence ledgers and internal control files are not publicly distributed.
Author disclosure
As of August 21, 2026, Charlie Wang holds a small long position in FICO. This personal holding is separate from the report’s WATCH / NO POSITION portfolio verdict. This research is not investment advice.
The original research is frozen as of July 31, 2026. Later developments, if material, are handled through separately dated addenda; the original PDF is not silently revised.