HealthEquity (HQY) Stock Forecast & Price Target

HealthEquity Inc. reported a notable increase in custodial revenue, rising by 15.3% year-over-year to $159.9 million, translating to 49.1% of Q2/26 revenue, driven primarily by enhanced yields on HSA cash and an increase in average daily balances. Additionally, the company achieved an adjusted EBITDA margin of 44.0%, reflecting a significant year-over-year increase of 466 basis points, underscoring operational efficiency amid revenue growth. With total revenue rising 7.2% in Q3/26 to $322.2 million, bolstered by strong custodial and interchange revenue increases, HealthEquity demonstrates solid financial momentum and a robust growth trajectory in the consumer-directed benefit sector.

The financial outlook for HealthEquity reflects various concerns that contribute to a negative sentiment regarding its stock performance. Despite a forecasted revenue increase of approximately 9% year-over-year for FY/27, the adjusted EBITDA estimates indicate a downward trend relative to previous projections, suggesting potential operational challenges. Additionally, the stock is trading at a valuation below its high-growth SaaS peers and its own historical averages, coupled with a recent one-time legal settlement impacting Q3 results, further fueling skepticism among investors.