Benzinga | Jul 8, 2021 10:45AM EDT

Analysts Initiate Coverage On Fair Isaac Betting On Its Shift To Cloud, Scores Business, Consumer Credit Market Recovery

* Goldman Sachs analyst George Tong initiated coverage of Fair Isaac Corp (NYSE:FICO) with a Buy rating and $577 price target.

* The price target implies an upside potential of 10.7% at current levels.

* Tong remains bullish for the U.S. consumer credit industry prospects over the next few years, supported by an improving macro backdrop, healthy consumer credit profiles, and a rebound in the auto and card categories.

* Fair Isaac's transformation into a cloud-based platform is likely to be a valuation driver, with additional tailwinds from the consumer credit market and pricing gains in its Scores business.

* RBC Capital analyst Ashish Sabadra initiated coverage of Fair Isaac with a Sector Perform rating and $550 price target.

* The price target implies an upside potential of 5.5% at current levels.

* Sabadra expects the pricing power to withstand robust double-digit growth in the Scores division. However, the shift to the subscription-based revenue model and the Collection and Recovery business divestiture could affect its software revenues over the near term.

* Fair Isaac recently sold its Collection and Recovery business to Constellation's Jonas Software operating group.

* Price action: FICO shares are up 0.30% at $522.91 on the last check Thursday.