BTIG maintains Buy on HealthEquity, keeps $130 target

On Wednesday, HealthEquity, Inc. (NASDAQ:HQY), a healthcare technology company with a market capitalization of $8.83 billion and an "GREAT" financial health rating according to InvestingPro, received a reaffirmation of a Buy rating and a $130.00 price target from BTIG analysts, following the company’s fourth-quarter earnings report. HealthEquity’s revenue for the quarter reached $311.8 million, a 19% year-over-year increase, surpassing both BTIG’s and consensus estimates, which were set at $306.8 million and $306 million, respectively. This performance aligns with the company’s impressive five-year revenue CAGR of 28%. However, the company’s adjusted EBITDA of $107.8 million, up 9% from the previous year, fell short of the $116.7 million and $115 million expected by BTIG and consensus.

HealthEquity’s earnings were impacted by additional service costs totaling $17 million, attributed to resolving fraud-related issues on a significant number of accounts. Without these costs, the company’s EBITDA would have been approximately $125 million, well above the consensus estimate of around $115 million. According to BTIG, HealthEquity’s service costs will persist into fiscal year 2026, particularly in the first half, but the firm anticipates these issues will be resolved over time.

The company has slightly raised its revenue guidance for fiscal year 2026, while the EBITDA guidance of $525-$545 million is slightly below the BTIG and consensus estimate of $546 million. Despite the lower EBITDA guidance, BTIG analysts are optimistic about HealthEquity’s future, citing the development of new products and a member-first digital experience focused on secure transactions. InvestingPro data reveals the company maintains a strong liquidity position with a current ratio of 3.06, suggesting robust operational flexibility. For deeper insights into HealthEquity’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

In light of the recent financial results and future prospects, BTIG has adjusted its fiscal year 2026 revenue estimates upwards, albeit with a slight reduction in EBITDA expectations. Trading at a P/E ratio of 93.44, the stock currently appears overvalued according to InvestingPro’s Fair Value analysis. Nonetheless, the firm maintains its Buy rating on HealthEquity stock, signaling confidence in the company’s growth trajectory and product innovation.

In other recent news, HealthEquity, Inc. reported its fourth-quarter fiscal year 2025 earnings, revealing a substantial revenue growth but a shortfall in earnings per share (EPS). The company achieved a revenue of $311.8 million, surpassing both JMP Securities’ estimate of $306.5 million and the consensus estimate of $305.8 million. However, HealthEquity’s non-GAAP EPS of $0.69 did not meet JMP Securities’ projection of $0.72, with the adjusted EBITDA also falling short of expectations at $107.8 million. The shortfall in profitability was attributed to an increase in service costs related to sophisticated fraud activity, which rose to $17 million from $8 million in the previous quarter.

JMP Securities responded to the earnings report by adjusting the price target for HealthEquity’s shares to $110 from the previous $120, while maintaining a Market Outperform rating. HealthEquity also announced the launch of new products, including AI-driven benefits tools, and opened 471,000 new Health Savings Accounts (HSAs) in the fourth quarter. The company continues to expand its market presence, achieving a record number of new HSA accounts and maintaining high client retention rates. Looking ahead, HealthEquity has set a revenue guidance range for fiscal year 2026 between $1.280 billion and $1.305 billion, with expectations for adjusted EBITDA to range from $525 million to $545 million.

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