FICO passed up a chance to raise prices, and its shares plunged

what happened

Wells Fargo downgraded FICO to Equal Weight from Overweight and cut its price target to $735 from $800, according to Barron's. Analysts argue the company is giving up a key profit driver by holding its mortgage credit-score pricing steady.

FICO shares fell 6.9% on Monday to $758. The stock is down 54% this year, according to Dow Jones Market Data, on track for its worst annual performance on record. Equifax slipped 0.8%, TransUnion dropped 2.5% and Experian fell 3.3%.

On Friday FICO said lenders in its new Preferred Program would keep paying $10 per score, in exchange for committing to use FICO scores in all applicable credit checks. The move targets competition from VantageScore, a joint venture of the three credit bureaus. Wells Fargo lowered its adjusted fiscal 2027 earnings estimate to $48.02 a share from $49.65.

why it matters

Pricing is central to FICO's profits: BMO Capital Markets called mortgage pricing the most important earnings lever. A recent decision by the Federal Housing Finance Agency to allow a structure incorporating VantageScore further weakens FICO's dominance and may affect the wider credit bureau sector.

market impact

FICO and bureaus Equifax, TransUnion, Experian: pressure on shares from pricing competition in mortgage scoring

tags

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