FICO - is this now a falling knife or another Visa / Mastercard temporary decline?

Fico fell 22% overnight on news of opening up the credit score market. It's lost half its value this year. Not pretty. Although on one hand the business is still doing well, so far there is not a huge exodus of revenue. If they hold to their estimates the next year it would make the stock attractive. On the other hand the uncertainly around future earnings is not something the market likes.

The credit business will not go away. Question is what will future profit margins be like and how much market share will they be able to project?

I've stayed on the sidelines until this one is clearer, but I'm not one to ignore a good business at a decent price. I wrote about MA and V around 6 months ago here when they were trading at attractive valuations, despite the uncertainty about rival systems. They worked out very well with gains of 20-25%. My central thesis on those was they owned the rails that the trains went on. It's very difficult to build new rails and even if you do it's even harder to convince people to run trains on them.

It's easy to dismiss a business, however there are times when it is worth catching even if you don't time the bottom. Main thesis is credit ratings businesses are be here to stay. Switching will happen so it will come down to who has a better product. FICO is likely to retain significant share. Their customers trust them and might not switch to alternatives even if they are available. Is it enough to warrant a buy? It’s more about this thesis than any numbers / stock slide at the moment.

I wish they had not bought back so many share at such high prices over the last few years and destroyed shareholder value. It's not as clear cut at V/MA (who have stronger moats and customer trust) but this could be an opportunity.