BTIG maintains buy rating for HealthEquity stock after strong earnings

On Wednesday, BTIG analysts reiterated a Buy rating for HealthEquity, Inc (NASDAQ:HQY) stock, maintaining a price target of $130.00. The $9 billion market cap company, which boasts a "GREAT" financial health score according to InvestingPro analysis, released its fiscal first-quarter results on Tuesday, exceeding both BTIG and consensus expectations. While the stock trades near its 52-week high of $115.59, InvestingPro’s Fair Value model suggests the stock may be currently overvalued. The company reported total revenue of $330.8 million, marking a 15% year-over-year increase, surpassing BTIG’s estimate of $326.3 million and the consensus estimate of $322 million. This performance aligns with the company’s impressive 20% revenue growth over the last twelve months, supported by a robust gross profit margin of 64.78%. Adjusted EBITDA also rose by 19% year-over-year to $140.2 million, significantly beating BTIG’s projection of $117.4 million and the consensus of $123 million.

HealthEquity raised the lower end of its fiscal 2026 revenue guidance and increased the midpoint of its adjusted EBITDA guidance by $5 million. The company noted improvements in direct fraud-related costs, which decreased from approximately $11 million in the fourth quarter of fiscal 2025 to around $3 million in the first quarter of fiscal 2026. BTIG expects tighter authentication processes to be implemented by the fall, potentially resolving the fraud issue within the next one or two quarters.

The firm continues to invest in technology, such as digital card capabilities and artificial intelligence for chat and claims processing. HealthEquity reported a 3.5% yield for the first quarter of fiscal 2026, aligning with its full-year forecast and improving from 3.23% in the previous quarter. The company is actively advancing some maturities to capitalize on favorable interest rates.

HealthEquity holds approximately $5.7 billion in assets under management for the remainder of fiscal 2026 and 2027, which are expected to re-price at rates of 3-4% or higher. Additionally, proposals for Health Savings Accounts (HSAs) in a new budget bill passed by the House are anticipated to increase access to HSAs, potentially expanding HealthEquity’s total addressable market. The company maintains strong liquidity with a current ratio of 3.06, positioning it well for market expansion. For deeper insights into HealthEquity’s growth potential and comprehensive analysis, access the full Pro Research Report available on InvestingPro, which offers detailed valuation metrics and growth projections among 12+ additional ProTips.

In other recent news, HealthEquity, Inc. has reported its first-quarter fiscal year 2026 earnings, showcasing a strong financial performance. The company achieved a revenue of $331.9 million, which represents a 15% increase year-over-year and exceeded the projected $322.58 million. HealthEquity’s earnings per share also outperformed expectations, reaching $0.97 against the forecast of $0.82. In terms of analyst actions, Citizens JMP raised the price target for HealthEquity to $117 from $110, maintaining a Market Outperform rating due to the company’s robust quarterly results. Meanwhile, Goldman Sachs reiterated a Neutral rating with a $104 price target, noting concerns about moderating Health Savings Account (HSA) growth trends despite acknowledging strong execution in the quarter.

HealthEquity’s adjusted EBITDA for the quarter was $140.2 million, reflecting a 19% increase compared to the previous year. The company has also provided guidance for fiscal year 2026, expecting revenue between $1.285 billion and $1.305 billion, with non-GAAP net income projected between $320 million and $335 million. Additionally, HealthEquity introduced new products, including an AI-powered claims adjudication system, which contributed to its competitive edge and improved service efficiency. The company is optimistic about potential legislative changes that could expand HSA access, which may further enhance growth opportunities.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.