HealthEquity (HQY) Stock Forecast & Price Target

HealthEquity Inc. reported a total revenue increase of 7.2% year-over-year in Q3 2026, amounting to $322.2 million, significantly driven by a robust 13% growth in custodial revenue, which comprised 49.4% of total revenue. Cash flow from operations saw a remarkable increase of 28.4%, reaching $339.2 million for the first nine months of the fiscal year, indicating strong operational efficiency and growth potential. Additionally, the company experienced an increase in average annualized yield on Health Savings Account (HSA) cash to 3.53%, reflecting improved financial returns and higher participation in its Enhanced Rates offering.

HealthEquity's financial outlook for FY/27 indicates revenues of $1.417 billion, a slight decrease from prior estimates, alongside adjusted EBITDA of $626.3 million, which, despite being above previous forecasts, may still reflect challenges given the competitive landscape and regulatory pressures in the healthcare savings sector. The enhanced expectations for FY/26 revenue and non-GAAP EPS, though showing year-over-year growth, are overshadowed by potential risks including high competition, regulatory changes affecting tax-advantaged accounts, and concerns over customer retention in relation to GLP-1 coverage. Additionally, operational costs, such as custodial expenses, have increased, which could further stress margins and reflect potential inefficiencies in managing growth.