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On Wednesday, Goldman Sachs analysts reiterated a Neutral rating and maintained a $104 price target for HealthEquity, Inc (NASDAQ: HQY). According to InvestingPro data, the stock currently trades above its Fair Value, with analyst targets ranging from $98 to $130. The decision follows the company’s first-quarter fiscal year 2026 results, which prompted revisions in forecasts.
The analysts highlighted several factors influencing the updated forecasts, including HealthEquity’s first-quarter results, new guidance, and insights into Health Savings Account (HSA) growth dynamics. The company maintains strong financial health, with InvestingPro data showing a robust gross profit margin of 65% and liquid assets exceeding short-term obligations. Improved gross margin trajectories in the Service and Interchange segments and updated operating expense assumptions were also noted.
For fiscal year 2026, the analysts now predict a revenue growth of 9.3%, up from a previous estimate of 8.5%. The earnings per share forecast has been adjusted to $3.69, an increase from the prior $3.63 estimate. InvestingPro analysis reveals 12 additional key insights about HealthEquity’s valuation and growth prospects, available to subscribers. Despite these adjustments, the analysts did not incorporate potential policy changes into their models.
HealthEquity’s first-quarter performance showed strong execution, with account growth aligning with Goldman Sachs estimates, but higher-than-expected Service and Interchange revenue trends. However, the company is experiencing a slowing organic HSA account growth trend, attributed to macroeconomic uncertainty and hiring trends.
The analysts also noted potential growth opportunities stemming from the reconciliation bill, which, if enacted, could accelerate account and custodial asset growth in the coming years. Despite these prospects, the Neutral rating reflects concerns over moderating HSA account growth trends.
In other recent news, HealthEquity, Inc. has reported impressive financial results for the first quarter of fiscal year 2026. The company achieved a revenue of $331.9 million, surpassing analysts’ projections of $322.58 million, marking a 15% year-over-year increase. Earnings per share (EPS) also exceeded expectations, coming in at $0.97 compared to the forecasted $0.82. The adjusted EBITDA was reported at $140.2 million, a 19% increase from the previous year, reflecting the company’s robust financial performance.
Following these results, Citizens JMP analysts raised their price target for HealthEquity to $117 from $110, maintaining a Market Outperform rating. This upgrade underscores the strong financial performance and positive outlook for the company. Additionally, HealthEquity has launched several new products, including an AI-powered claims adjudication system, which is expected to enhance operational efficiency and member satisfaction.
The company’s gross profit margin improved to 68%, up from 65% the previous year, indicating effective cost management. HealthEquity’s executives have also highlighted potential legislative changes that could expand Health Savings Account (HSA) access to millions more American families, presenting further growth opportunities. These developments demonstrate HealthEquity’s strategic initiatives to strengthen its market position and financial performance.
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