BUZZ - FICO shares fall following Wall Street rating downgrade

October 26 - ** Credit scoring giant Fair Isaac Corporation (FICO.N) saw its shares drop 9.2% premarket on Monday to $739.94, after analysts downgraded the stock and lowered its target price

** Wells Fargo downgraded FICO's rating from "Overweight" to "Neutral" and sharply cut its target price from $800 to $735, after FICO announced 2027 pricing that fell short of market expectations

** The company said late Friday (link) it would keep the wholesale mortgage loan price for lenders participating in its "Preferred Program" at $10, in exchange for those lenders committing to 100% use of FICO credit scores

** Wells Fargo said it had previously expected FICO to implement a substantial price increase in 2027, adding that its survey "indicates that most lenders are likely to continue checking both FICO and VantageScore (VS) to bypass government-sponsored enterprise restrictions"

** However, Wells Fargo now expects FICO's "Preferred Program" to see "widespread adoption," which should help maintain FICO's usage rate but will cap upside potential for profits

** JPMorgan maintained its "Neutral" rating and lowered its target price from $1,530 to $900, stating that if FICO cannot benefit from a significant increase in mortgage loan credit scoring prices, its revenue growth is likely to settle into the mid-single-digit percentage range

** Bank of Montreal (BMO) lowered its target price from $1,150 to $897

** According to LSEG data, the average rating among 23 brokerages is "Buy"; the median target price is $951.50

** Earlier this month, FICO said it would cut jobs (link), reducing staff by 15% as part of an AI-driven restructuring plan

** Last month, the Federal Housing Finance Agency (FHFA) instructed mortgage lending giants Fannie Mae and Freddie Mac to allow all lenders to use VantageScore—a competing credit scoring model jointly developed by Equifax (EFX.N), Experian (EXPN.L), and TransUnion (TRU.N)

** On September 29, FICO shares plunged about 27% after FHFA Director Bill Pulte said (link) that Fannie Mae and Freddie Mac will apply uniform pricing standards for both VantageScore and FICO scores

** As of Friday's close, the stock is down 52% year-to-date

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