Jim Cramer - Mad Money Fair Isaac Corp. FICO-N BUY ON WEAKNESS Jan 05, 2024

The #14 stock on the S&P last year, up 94.5%. They created and own the FICO credit score, drawing revenues from companies and individuals alike. Their software business is strong, amounting to about 50% of their sales. They're innovative and keep offering new products. Banks are key clients who need credit scores. Software revenue was up 11% and annual recurring revenue was up 22%. Retention rate was 120% (gaining more business). Their performance supports a rising PE. But it now trades at 47x PE, higher than peers, too pricey. It'll likely pullback. A fine company.

Jim Cramer - Mad Money

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BUY

It is attractive. It is impossible to get a US mortgage without their score. It is moving to the cloud because some companies cannot afford an installation of their software. There should be more visible and repetitive growth due to moving to a software-as-a-service model.

DON'T BUY

He's surprised this is plunging, but all fintech is rolling over now.

DON'T BUY

Buy the dip now? More companies are entering this industry and are offering a better way to offer loans.

BUY

No one will build a better mousetrap than FICO.

COMMENT

He suggested waiting for a pullback, but it's recently rallied 15%, though pulled back today 7% because they missed top and bottom, though reiterated gull-year forecasts. But analysts expected better.

BUY ON WEAKNESS

Yesterday, they reported a sizable top and bottom line beat, accelerated revenue growth and raised their full-year forecast, but not as high as the street expected. So shares plunged 7% today. Also, the street is worried about long-term interest rates going higher.

BUY

This has survived countless fintech companies that can't beat FICO. They provide software to companies to manage credit risk. Is up 5,732% over 20 years.

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Jim Cramer - Mad Money Fair Isaac Corp. FICO-N BUY ON WEAKNESS Jan 05, 2024

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