HealthEquity To Capture More Market Share, Says Analyst In Overweight Rating Rationale

KeyBanc Capital Markets analyst Scott Schoenhaus reiterated an Overweight rating on HealthEquity, Inc. HQY, with an $85 price target.
HealthEquity delivered a Street-beating performance in the first quarter, where earnings and revenues exceeded expectations.
The company raised both its FY24 revenue and Adj. EBITDA guidance with cash yields.
The analyst believes that HealthEquity is well-positioned to grow revenue by gaining share within the Health Savings Accounts markets (both organically and opportunistically via acquisitions, albeit M&A likely pushed out).
In addition, HealthEquity's growing, high-margin HSA assets are contributing to a strong cash position, which will support multiple expansions for an Overweight rating by the analyst going ahead.
Based on the tailwinds, the analyst raised estimates to reflect higher yields and some service fee growth.
For FY24, the analyst sees a revenue estimate of $984.8 million, up from earlier expectations of $967.5 million. The adjusted EBITDA estimate for FY24 is $338.1 million, higher than the prior estimate of $324.4 million.
For FY25, the analyst's revenue estimate is $1.138 billion, up from the prior expectation of $1.132 billion. The adjusted EBITDA estimate is $439.3 million against the previous estimate of $426.6 million.
Price Action: HQY shares are trading higher by 10.27% to $64.88 on the last check Tuesday.

Analyst Calendar