HealthEquity (HQY) Stock Forecast & Price Target

HealthEquity Inc. demonstrated strong financial performance in the second quarter, with total revenue rising 8.6% to $325.8 million, driven by a notable 15.3% increase in custodial revenue, which alone accounted for 49.1% of total revenue. The company reported significant growth in both health savings accounts and investments, with HSA cash reaching $17.035 billion, a 4% year-over-year increase, while HSA investments surged 24% to $16.1 billion. Additionally, interchange revenue improved by 8.0% to $48.1 million, reflecting an increase in both total accounts and spending per account via HealthEquity's payment cards, highlighting the company’s robust account growth and transactional activity.

HealthEquity's financial outlook indicates potential challenges, as its shares have declined 7% year-to-date despite a prior increase of 45% in 2024, and are currently trading below both its five-year valuation average and the average valuation of its high-growth SaaS peers. The latest projections for FY/27 reflect a revenue estimate of $1.427 billion, representing a modest 9.2% year-over-year growth, while adjusted EBITDA is forecasted at $617.5 million, which is a decrease from prior estimates. Additionally, known risks such as increasing competition, rising alternative payment methods, and regulatory uncertainties could further hamper the company's growth and profitability.