EmilyMark
09-04

$Fair Isaac(FICO)$ I’m interested in acquiring a position in FICO, but I have concerns about its current valuation. The recent increase in the stock price seems to be driven primarily by multiple expansion. Looking ahead, what will sustain future returns? It’s unlikely that further multiple expansion will occur from a 90 P/E ratio, especially with revenue growth projected at 8-12% in the coming years. Is the company’s monopoly and pricing power the key factors that will drive FCF per share growth? What kind of returns can be expected over the next 5-10 years? Perhaps 10-15% if the P/E ratio compresses slightly as the company matures and growth slows?

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