Why Fair Isaac Stock Bounced Almost 3% Skyward on Wednesday

Investors were more than fair to credit analysis specialist Fair Isaac's (NYSE: FICO) stock on Wednesday. They traded it up by nearly 3%, following a bullish upgrade by an analyst. That sub-3% improvement was notably better than the S&P 500 index's performance; the closely followed index registered only a marginal gain on the day.

A move into the buy column

The pundit behind the move was RBC Capital's Ashish Sabadra, who, in the very early morning hours of Wednesday, pulled the lever on that recommendation change. Sabadra has deemed Fair Isaac worthy of an outperform (buy, in other words) rating, which is up from his previous sector perform designation. The analyst also increased his price target on the shares to $2,170 apiece from his previous $2,040.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

According to reports, Sabadra's change is due to his new view that the stock has become undervalued. He feels that the market is not taking into sufficient account the company's dominance in scoring mortgages, particularly given that this provides it with strong pricing power.

The prognosticator added that with these and other tailwinds, Fair Isaac could potentially boost its annual recurring revenue (ARR) by over 30%.

A solid and reliable performer

Sabadra also believes that Fair Isaac is quite a shareholder-friendly company, writing that its capital allocation strategy should at least somewhat mitigate fallout from negative developments.

The analyst is certainly accurate in describing the company's advantages. It's got a rather sturdy economic moat; that, plus its continued strong presence in its niche, surely makes it worthy of consideration as a buy.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $328,354!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $46,837!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $527,017!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

Learn more »

*Stock Advisor returns as of February 24, 2025

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Fair Isaac. The Motley Fool has a disclosure policy.