FICO Bounces 4.75% After a Brutal Selloff, but Can a Company Under Senate Investigation and Price War Keep Charging What It Wants?

Shares of Fair Isaac Corporation shifted sharply last week, rebounding 4.75% to $966 after a punishing 14% single-day drop on April 10 that sent the stock to its lowest level since late 2023. The bounce looks more like a relief rally than a resolution — the fundamental threats squeezing FICO's extraordinary profit machine remain intact, and investors need to decide whether the dip is a buying opportunity or the start of a structural decline.

A Price Target Cut That Still Says "Buy" — But at a Much Lower Bar

Barclays slashed its price target on FICO from $2,400 to $1,950 while keeping an "Overweight" (buy-equivalent) rating.

The stock is now down nearly 50% over the past year.

The analyst consensus target sits at $1,833, roughly 90% above the current price — a gap that signals either deep value or an industry in denial about the regulatory risks ahead.

Washington Is Coming for FICO's 88% Margins

Senator Josh Hawley opened a formal probe noting FICO "dominates the credit scoring market with a product used by 90% of lenders" and raised its per-score wholesale price from $0.60 to $10.00 over five years.

He also urged the FTC to launch its own investigation.

FICO's Scores segment alone generated $1.17 billion in fiscal 2025 revenue at roughly 88% operating margins — numbers Hawley called incompatible with a competitive market. A shareholder rights law firm has now opened a parallel fraud investigation into whether FICO misled investors.

A Cheaper Rival Is Finally Getting Government Backing

Credit bureaus have begun offering VantageScore 4.0 at as low as $1.00 per mortgage pull, undercutting FICO's $10.00 price.

The FHFA is now directing Fannie Mae and Freddie Mac to let lenders choose between FICO and VantageScore 4.0 — ending a decades-long exclusive arrangement. VantageScore estimates full adoption could save the mortgage industry roughly $649 million in the first year alone.

Strong Earnings Buy Time, but the Business Model Is the Question

FICO posted $7.33 EPS last quarter, beating estimates, with a 31.9% net margin and 16.4% revenue growth.

The board authorized a $1.5 billion buyback in February. But those results reflect a pricing regime now under direct political and competitive attack. If VantageScore gains even modest mortgage-market share, FICO's highest-margin revenue stream faces permanent compression — and the stock's recovery will need more than a dead-cat bounce to sustain itself.