Overview
RBC Capital has reaffirmed an Outperform rating on Fair Isaac Corporation (NYSE:FICO), setting a $2,400 price target - a projection that amounts to approximately 57% upside from the stock's current level of $1,525.67. The brokerage weighed recent product and commercial momentum against valuation metrics and competitive considerations in its assessment.
Operational performance and margins
RBC highlighted a "Solid Scores beat," indicating that the Scores business exceeded expectations in the most recent reporting period. The company reported an 82.23% gross profit margin and revenue growth of 15.91% over the last twelve months, metrics the analyst cited as evidence of durable unit economics and underlying demand.
Subscription and contract metrics
Platform Annual Recurring Revenue (ARR) acceleration to 37% growth was a focal point in the research note. RBC clarified that, excluding migration effects, Platform ARR growth remains in the high-20% range. Trailing twelve-month Annual Contract Value (ACV) rose 36%, and the firm expects strong bookings momentum to continue into fiscal year 2026.
Competitive landscape
The analyst addressed concerns about VantageScore as a competitive threat. RBC described VantageScore-related risks as "manageable," citing the potential for gaming and adverse selection that, in the firm's view, would make it difficult for the Federal Housing Finance Agency (FHFA) to publish VantageScore LLPA grids or charge a consistent premium for VantageScore. That assessment frames competitive pressure as present but constrained by structural dynamics in the mortgage and credit markets.
Commercial strategy and pricing
RBC also pointed to progress on FICO's direct model as a lever for pricing creativity. The broker suggested that a strengthened direct route-to-customer will give the company "greater flexibility to price for value with creative pricing strategies," an argument linking go-to-market evolution to potential margin expansion and improved monetization.
Valuation and recent stock action
Despite the positive operational signals, the stock trades at a P/E ratio of 58.39, which InvestingPro characterizes as a high earnings multiple relative to near-term growth. FICO's shares have fallen 17.98% over the past year and are about 31% below their 52-week high of $2,217.60. RBC described the pullback as creating "an attractive long-term buying opportunity."
Quarterly results
In its most recent quarterly release for the first quarter of fiscal 2026, Fair Isaac reported adjusted earnings per share of $7.33, ahead of the $7.07 consensus. Revenue was $512 million, beating the $500.72 million estimate. Even with those beats, the company's shares declined in aftermarket trading following the report.
Research coverage and investor tools
InvestingPro's analysis notes that FICO is among more than 1,400 U.S. equities that have a comprehensive Pro Research Report intended to distill complex data into actionable research. RBC's continued positive stance alongside that coverage underscores sustained analyst interest.
Implications
RBC's thesis centers on accelerating ARR and contract-value growth, supported by strong gross margins and the potential for improved direct monetization and creative pricing. The firm believes these factors should sustain bookings into fiscal 2026 and justify an Outperform stance despite a premium multiple.
Investor considerations
Investors should weigh the company's robust recurring-revenue momentum and margin profile against valuation levels, recent share weakness, and the competitive debate around alternative scoring products. The note frames the current share price as a long-term opportunity per RBC's view, but also reflects that some market participants reacted negatively to the aftermarket trading after the quarterly beats.
Article prepared from analyst commentary and company reported results.