HealthEquity's High-Margin HSA Assets: Analyst's Perspective On Their Impact On Revenue

KeyBanc Capital Markets analyst Scott Schoenhaus reiterated an Overweight rating on the shares of  HealthEquity, Inc. HQY, with a price target of $85.

The analyst remains particularly bullish on the company's higher custodial yields (the analyst models 2.35% for this year and 2.90% for next year).

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), Schoenhaus notes. 

The company's growing, high-margin HSA assets should contribute to its healthy cash position, the analyst mentions.

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For FY24, the analyst expects the company's revenue estimate to be $984.8 million, up from $967.5 million prior estimate.

FY24 adj. EBITDA is estimated to be $338.1 million vs. previous estimate of $324.4 million. 

For FY25, the analyst's revenue estimate will be $1.138 billion, higher than the previous expectation of $1.132 billion. FY25 adj. EBITDA estimate is now $439.3 million from the prior $426.6 million estimate. 

Price Action: HQY shares are trading lower by 1.7% to $63.70 on the last check Monday.