Fair Isaac Drops on Disappointing Results
SAN FRANCISCO - Investors punished shares of Fair Isaac (FIC) Tuesday after the credit-scoring software company reported results from a difficult second quarter.
Its stock was down $4.09, or 15.4%, to $22.34 in recent trading on triple its average volume.
In a note Tuesday, Wedbush Morgan analyst Michael Nemeroff advised investors to remain on the sidelines, citing continued weakness in financial services, potential problems while the company restructures, and pricing pressure in Fair Isaac's high-margin scoring business from VantageScore, a competing product offered by the three largest U.S. credit bureaus. The firm makes a market in shares of FIC.
The company's guidance for full-year revenue of $763.3 million and EPS of $1.51 is well below the consensus estimate, Nemeroff noted. Analysts were projecting a top line of $829.5 million and EPS of $1.83. Fair Isaac's second-half revenue projections exclude discontinued operations of four business lines the company hopes to sell in the coming months.
Revenue from discontinued operations during the second quarter was $10.1 million and $19.3 million for the first fiscal half.
The scoring business declined 7.2% year over year to $39.3 million, while professional services grew 6% to $39.5 million.
Fair Isaac's FICO scoring system is coming under competitive pressure from the company's three primary credit bureau customers --
Equifax
(EFX) - Get Report
,
Experian
and
TransUnion
-- which created VantageScore.
In the software sector,
Advent Software
(ADVS)
is due to report earnings Tuesday afternoon, and
SAP
(SAP) - Get Report
is set to report before the market opens Wednesday.