RBC Capital has begun coverage on HealthEquity (HQY, Financial), assigning it an Outperform rating and raising the price target to $112 from the prior $105. This optimistic view is supported by HealthEquity's strong position in the expanding health savings account sector, where it maintains a leading market share that is on the rise. According to the analyst's insights, the company benefits from higher yields on cash balances and employs technology to reduce servicing costs, which is expected to result in sustained high-single-digit revenue growth and widening profit margins.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 13 analysts, the average target price for HealthEquity Inc (HQY, Financial) is $111.77 with a high estimate of $130.00 and a low estimate of $94.00. The average target implies an upside of 13.13% from the current price of $98.80. More detailed estimate data can be found on the HealthEquity Inc (HQY) Forecast page.
Based on the consensus recommendation from 14 brokerage firms, HealthEquity Inc's (HQY, Financial) average brokerage recommendation is currently 1.6, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for HealthEquity Inc (HQY, Financial) in one year is $100.41, suggesting a upside of 1.63% from the current price of $98.795. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the HealthEquity Inc (HQY) Summary page.
HQY Key Business Developments
Release Date: March 18, 2025
- Revenue Growth: Up 19% year-over-year for Q4.
- Adjusted EBITDA: Increased 9% to $107.8 million for Q4.
- HSA Growth: HSAs grew 14%, totaling 9.9 million accounts.
- HSA Assets: Increased 27% to $32 billion.
- Invested Assets: Grew 44% to $14.7 billion.
- Gross Profit: $189 million, representing 61% of revenue for Q4.
- Net Income: $26.4 million or $0.30 per share (GAAP) for Q4.
- Non-GAAP Net Income: $61.3 million or $0.69 per share for Q4.
- Full Year Revenue: $1.2 billion, up 20% year-over-year.
- Full Year Adjusted EBITDA: $471.8 million, up 28% year-over-year.
- Cash on Hand: $296 million as of year-end.
- Fiscal '26 Revenue Guidance: $1.28 billion to $1.305 billion.
- Fiscal '26 GAAP Net Income Guidance: $164 million to $179 million.
- Fiscal '26 Non-GAAP Net Income Guidance: $318 million to $333 million.
- Fiscal '26 Adjusted EBITDA Guidance: $525 million to $545 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- HealthEquity Inc (HQY, Financial) reported a 19% year-over-year increase in revenue for Q4 2025.
- The company achieved a milestone of 1 million new Health Savings Accounts (HSAs) from sales for the year.
- HSA assets increased by 27% year over year, with invested assets up 44% to $14.7 billion.
- The company launched a new app experience, downloaded by over 1 million members, enhancing user engagement.
- HealthEquity Inc (HQY) introduced the Assist Portfolio, offering solutions like Analyzer and Navigator to improve benefits offerings for employers and employees.
Negative Points
- The company faced increased service costs due to sophisticated fraud activities, impacting gross profit.
- Gross profit margin decreased slightly from 62% to 61% year over year due to additional service costs.
- HealthEquity Inc (HQY) expects elevated service costs to continue into the first half of fiscal 2026.
- The company is experiencing increased cyber threats and fraud attacks, leading to excess service expenses.
- Despite strong revenue growth, the adjusted EBITDA margin decreased from 38% to 35% in Q4 2025.
