FICO is a high-conviction buy for long-term investors; its strong fundamentals outweigh risks of eroding market dominance.

Shares of Fair Isaac Corporation (FICO) have fallen 45% since the beginning of 2026, due to investor concerns about mortgage rating regulations and the significant shift in Vantage Score policy .

In addition, recent news headlines indicating that FICO is expanding its reach to federal housing loan (FHA) lenders have caused increased concerns, as while this will support reliance on it, it limits its pricing power.

So, investors are asking me: Does this decline or collapse in FICO stock represent a buying opportunity? So, despite those risks I mentioned in the headlines, Vico's business is still thriving.

Revenue growth was above 20% even in the last quarter.

Therefore, what worries investors is the future of the company, not just what is happening at the moment. Investors are looking to the future, to changes in policies and regulations that may limit the company's dominance over its strong market share .

FICO's total revenue reached $2.4 billion during the past twelve months. This represents an increase from about $500 million in 2017. FICO is, of course, best known for its FICO score system, which lenders use extensively when making decisions about granting home loans.

Given that the price of a "Vico" grade represents a relatively small part of the overall cost of a lender's decision to grant a loan to a consumer, "Vico" has been able to raise prices for many years ; Investors have appreciated this pricing power, which they call a relative monopoly position.

But this strong position has recently begun to erode due to the policy changes I mentioned in the introduction. So, that strong control that FICO had over the market is now beginning to weaken, and this is the main reason why FICO's stock is expected to fall by about 50% in 2026.

But to say that this is a strong company would be an understatement . I have shared with you the excellent revenue growth over the past decade, but also look at the expansion of profit margins.

Operating profit margins have risen to 52% over the past twelve months, compared to around 20% in 2017.

So, FICO is certainly benefiting from this strong market situation, and has been for most of the past decade. In addition to expanding strong operating profit margins, the company's return on invested capital was a first-class 56.5 %, approximately five times the company's weighted average cost of capital.

These are elite levels of return on invested capital (ROIC) and return on invested capital to weighted average cost of capital (WACC) ratios.

So, as I mentioned, saying this is an excellent company is a far understatement of what it certainly deserves.

Given this dominant performance, FICO stock has traditionally traded at high to extremely high valuations for most of the past decade, and valuations have only fallen to reduced levels this year.

As of the time of recording this video, FICO stock is trading at a forward price-to-earnings ratio of 17.5. This is the lowest price at which the stock has traded according to this valuation metric in a very long time.

So, those risks that I mentioned in the introduction are now reflected in the company's valuation. You can argue about whether a larger risk premium needs to be incorporated into its valuation, and I, you know, would be open to hearing those arguments.

I will not close the door on those arguments because the matter is extremely important.

One of the main reasons FICO has been able to demonstrate that level of excellent performance that it has shared with you over the past decade is its dominant grip on the market.

Therefore, if this grip begins to loosen and becomes less strong, its ability to achieve those profit margins and revenue growth figures will be called into question. Therefore, it is reasonable to believe that the stock deserves a discount given those risks.

I also updated my FICO discounted cash flow calculations today, and concluded that the company is worth $1,153 per share compared to the current market price of $932 per share .

Therefore, I am calculating a potential 24% rise for FICO shares over the next 12 to 18 months, given current market prices.

To answer the question I posed in the title , is this crash a buying opportunity? I think so . I have rated Fair Isaac or FICO stock as a buy opportunity with a high level of conviction.

This is the highest level of conviction I can have towards any business. The rating ranges from low to medium to high.

I am highly convinced that this is an excellent buying opportunity for long-term investors to absorb that risk, and to bear the possibility that the company will lose its grip on the market and the impact that such a relaxation could have on its revenues.

That is the risk you are taking here. I think you get a good potential reward for taking that risk.