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Here's Why You Should Retain HealthEquity (HQY) Stock Now
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HealthEquity, Inc. (HQY - Free Report) has been benefiting from its distinctive investment platform. Health Savings Accounts (HSAs) strength and a strong third-quarter fiscal 2024 performance are expected to fuel more optimism. However, there are significant drawbacks, which include stiff competition and potential risks related to acquisition.
Over the past year, the Zacks Rank #3 (Hold) stock has gained 46.4% compared with the 6.1% rise of the industry. The S&P 500 has witnessed 29.4% growth in the said time frame.
The renowned provider of technology-enabled services platforms for healthcare savings and spending decisions has a market capitalization of $6.99 billion. The company projects 28.6% growth for the next five years and expects to witness continued improvements in its business. HealthEquity’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average earnings surprise being 16.5%.
Image Source: Zacks Investment Research
Let’s delve deeper.
Good Investment Platform: We hold high expectations for HealthEquity's several cloud-based services, which are assessed by its members online through a desktop or mobile device. Through these platforms, people can, among other things, pay their medical expenses, make decisions about their spending and health and save money. Users of these platforms can access services offered by HealthEquity as well as services from outside vendors that HealthEquity or its Network Partners have chosen.
Growth in HSA: The overall number of HSAs increased 8.4% year over year, as of Oct 31, 2023. On Oct 31, HealthEquity reported 592,000 HSAs with investments, an increase of 11.9% year over year. Moreover, total accounts were 5.4% higher than the prior year, as of Oct 31. This uptick included total HSAs and 6.9 million other consumer-directed benefits (CDBs). As of October 2023-end, total HSA assets, which include investments and cash, had increased 11.7% year over year. HealthEquity's HSA platform, among other things, can give consumers access to medical bills that have been adjudicated by a health plan, along with information like the amount covered by insurance.
Strong Q3 Results: HealthEquity witnessed strong top-line and bottom-line performances in third-quarter fiscal 2024. The top line benefited from robust contributions from the majority of its revenue sources. The expansion of both margins was also observed.
Downsides
Tough Competition: The medical services market is a dynamic and fragmented industry that presents strong competition for HealthEquity. The company's capacity to boost engagement and convince both current and new clients of the benefits of its services, as well as the desire of consumers to use HSAs and other CDBs more frequently, are key factors in determining its success.
Integration of Acquisitions Maybe Unsuccessful: The success of HealthEquity’s recent acquisitions depends partly on its ability to realize the anticipated business opportunities by combining the operations of the acquired businesses with its business in an efficient and effective manner. The integration of HealthEquity’s acquisitions could be time-consuming and can be more costly than anticipated, and it could result in the disruption of its ongoing business and the acquired business, among others, and could harm its financial performance.
Estimate Trend
HealthEquity has been witnessing a positive estimate revision trend for fiscal 2024. Over the past 90 days, the Zacks Consensus Estimate for its earnings per share has moved 6.9% north to $2.15.
The Zacks Consensus Estimate for fourth-quarter fiscal 2024 revenues is pegged at $258.4 million, suggesting a 10.4% rise from the year-ago reported number.
Some better-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Cardinal Health, Inc. (CAH - Free Report) and Cencora, Inc. (COR - Free Report) .
DaVita, sporting a Zacks Rank #1 (Strong Buy), has an estimated long-term growth rate of 12.1%. DVA’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 35.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have gained 58.3% compared with the industry’s 18.9% rise in the past year.
Cardinal Health, flaunting a Zacks Rank of 1 at present, has an estimated long-term growth rate of 14.2%. CAH’s earnings surpassed estimates in each of the trailing four quarters, with the average being 15.6%.
Cardinal Health has gained 51.9% compared with the industry’s 3.2% rise in the past year.
Cencora, carrying a Zacks Rank of 2 (Buy) at present, has an estimated long-term growth rate of 9.8%. COR’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 6.7%.
Cencora’s shares have rallied 51.5% compared with the industry’s 3.6% rise in the past year.
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Here's Why You Should Retain HealthEquity (HQY) Stock Now
HealthEquity, Inc. (HQY - Free Report) has been benefiting from its distinctive investment platform. Health Savings Accounts (HSAs) strength and a strong third-quarter fiscal 2024 performance are expected to fuel more optimism. However, there are significant drawbacks, which include stiff competition and potential risks related to acquisition.
Over the past year, the Zacks Rank #3 (Hold) stock has gained 46.4% compared with the 6.1% rise of the industry. The S&P 500 has witnessed 29.4% growth in the said time frame.
The renowned provider of technology-enabled services platforms for healthcare savings and spending decisions has a market capitalization of $6.99 billion. The company projects 28.6% growth for the next five years and expects to witness continued improvements in its business. HealthEquity’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average earnings surprise being 16.5%.
Image Source: Zacks Investment Research
Let’s delve deeper.
Good Investment Platform: We hold high expectations for HealthEquity's several cloud-based services, which are assessed by its members online through a desktop or mobile device. Through these platforms, people can, among other things, pay their medical expenses, make decisions about their spending and health and save money. Users of these platforms can access services offered by HealthEquity as well as services from outside vendors that HealthEquity or its Network Partners have chosen.
Growth in HSA: The overall number of HSAs increased 8.4% year over year, as of Oct 31, 2023. On Oct 31, HealthEquity reported 592,000 HSAs with investments, an increase of 11.9% year over year. Moreover, total accounts were 5.4% higher than the prior year, as of Oct 31. This uptick included total HSAs and 6.9 million other consumer-directed benefits (CDBs). As of October 2023-end, total HSA assets, which include investments and cash, had increased 11.7% year over year. HealthEquity's HSA platform, among other things, can give consumers access to medical bills that have been adjudicated by a health plan, along with information like the amount covered by insurance.
Strong Q3 Results: HealthEquity witnessed strong top-line and bottom-line performances in third-quarter fiscal 2024. The top line benefited from robust contributions from the majority of its revenue sources. The expansion of both margins was also observed.
Downsides
Tough Competition: The medical services market is a dynamic and fragmented industry that presents strong competition for HealthEquity. The company's capacity to boost engagement and convince both current and new clients of the benefits of its services, as well as the desire of consumers to use HSAs and other CDBs more frequently, are key factors in determining its success.
Integration of Acquisitions Maybe Unsuccessful: The success of HealthEquity’s recent acquisitions depends partly on its ability to realize the anticipated business opportunities by combining the operations of the acquired businesses with its business in an efficient and effective manner. The integration of HealthEquity’s acquisitions could be time-consuming and can be more costly than anticipated, and it could result in the disruption of its ongoing business and the acquired business, among others, and could harm its financial performance.
Estimate Trend
HealthEquity has been witnessing a positive estimate revision trend for fiscal 2024. Over the past 90 days, the Zacks Consensus Estimate for its earnings per share has moved 6.9% north to $2.15.
The Zacks Consensus Estimate for fourth-quarter fiscal 2024 revenues is pegged at $258.4 million, suggesting a 10.4% rise from the year-ago reported number.
HealthEquity, Inc. Price
HealthEquity, Inc. price | HealthEquity, Inc. Quote
Key Picks
Some better-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Cardinal Health, Inc. (CAH - Free Report) and Cencora, Inc. (COR - Free Report) .
DaVita, sporting a Zacks Rank #1 (Strong Buy), has an estimated long-term growth rate of 12.1%. DVA’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 35.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have gained 58.3% compared with the industry’s 18.9% rise in the past year.
Cardinal Health, flaunting a Zacks Rank of 1 at present, has an estimated long-term growth rate of 14.2%. CAH’s earnings surpassed estimates in each of the trailing four quarters, with the average being 15.6%.
Cardinal Health has gained 51.9% compared with the industry’s 3.2% rise in the past year.
Cencora, carrying a Zacks Rank of 2 (Buy) at present, has an estimated long-term growth rate of 9.8%. COR’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 6.7%.
Cencora’s shares have rallied 51.5% compared with the industry’s 3.6% rise in the past year.