HealthEquity stock target cut to $110 by JMP Securities

On Wednesday, JMP Securities analyst Constantine Davides adjusted the price target for HealthEquity, Inc (NASDAQ:HQY) shares to $110 from the previous $120, while retaining a Market Outperform rating on the stock. The revision followed HealthEquity’s fourth-quarter fiscal year 2025 earnings report, which was released after market close on Tuesday. According to InvestingPro data, the stock currently trades at $101.67, with analyst targets ranging from $105 to $130, suggesting potential upside despite recent adjustments.

HealthEquity reported fourth-quarter revenue of $311.8 million, marking a 19% increase year-over-year and surpassing both JMP Securities’ estimate of $306.5 million and the consensus estimate of $305.8 million. This performance aligns with the company’s impressive 20.03% revenue growth over the last twelve months, as reported by InvestingPro. However, the company’s non-GAAP earnings per share (EPS) of $0.69 did not meet JMP Securities’ projection of $0.72. Adjusted EBITDA for the quarter was $107.8 million, a 9% year-over-year increase, but still below both JMP Securities’ expectation of $111.8 million and the consensus of $114.6 million.

The shortfall in profitability for the fourth quarter was largely attributed to an incremental $17 million in service costs associated with sophisticated fraud activity. This was a significant increase from the $8 million incurred in the third quarter. Excluding these costs, JMP Securities estimated that the service gross margin for the fourth quarter would have been approximately 28.7%, which would represent an expansion of about 160 basis points quarter-over-quarter from the reported 15.1%.

The company’s earnings report indicates that while HealthEquity experienced growth in revenue, unexpected costs related to fraud mitigation impacted its profitability metrics. The revised price target reflects the analyst’s updated valuation in light of these recent developments.

In other recent news, HealthEquity Inc. reported its fourth-quarter 2025 earnings, showcasing a notable revenue increase but falling short on earnings per share (EPS) expectations. The company’s revenue reached $3.11 billion, surpassing the forecasted $305.82 million, while EPS was reported at $0.69, missing the anticipated $0.72. HealthEquity also launched new AI-driven benefits tools and opened 471,000 new Health Savings Accounts (HSAs) in the quarter. Despite the strong revenue performance, the EPS miss contributed to a negative market reaction. Looking ahead, HealthEquity has set a revenue guidance range for fiscal year 2026 between $1.280 billion and $1.305 billion. The company anticipates GAAP net income to be between $164 million and $179 million, with non-GAAP net income projected between $318 million and $333 million. Adjusted EBITDA is expected to range from $525 million to $545 million. These developments reflect HealthEquity’s ongoing efforts to expand its market presence and enhance its product offerings.

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