$FICO daily pick: small starter buy, add down to $620

$FICO: I'm starting a small position here and I'd add down to $620.

As of Friday's close ($771.19):
34% below the 200-day and 59% off the 52-week high
About 16x next year's EPS estimate with a 6% free cash flow yield
Revenue up 26% last quarter

I think the VantageScore scare priced in a worst case that hasn't shown up yet because FICO still prints cash and lenders like UWM are sticking with it.

Would you buy the old credit score monopoly here or wait for earnings?

Not financial advice

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Why small? FICO fell 27% on Sep 29 after FHFA director Bill Pulte put VantageScore on the same Fannie and Freddie pricing grid and Rocket made it their preferred score. It's already up 30% off the Sep 30 close so I'm leaving room to add between $620 and $700.

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Bear case: mortgage scores are where FICO had the most pricing power and TransUnion is keeping VantageScore 4.0 at $0.99 through 2028. BofA cut it to Neutral with a $700 target. Net debt is about 4.2x EBITDA. Any of that can keep the multiple low for a while.

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Catalyst: fiscal Q4 results around Nov 4. Last quarter was $12.18 EPS vs $11.76 expected on $674M revenue. They're also cutting about 15% of the workforce. What they say about mortgage score volumes and pricing is the part I care about.

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What I'd watch: a close back above the 50-day ($938) tells me the selling is done. A weekly close under the Sep 30 low ($586) means I'm wrong and I'd step aside. Street PT is around $1,160 for what it's worth.

Sources: FMP: $FICO quote, estimates and price history · Robinhood: $FICO quote and daily RSI · Forbes: FICO stock crashes 27% after FHFA single pricing grid (Sep 29) · Motley Fool: why Fair Isaac plunged (Rocket, TransUnion $0.99 VantageScore) · Yahoo Finance: BofA cuts FICO to Neutral, $700 target (Oct 1) · Business Wire: UWM reaffirms commitment to FICO Scores (Oct 6)

Not financial advice. For informational and educational purposes only.