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HealthEquity Gains 28.3% YTD: What's Driving the Stock?
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HealthEquity, Inc. (HQY - Free Report) witnessed strong momentum in the year-to-date period. Shares of the company rallied 28.3% compared with 6.5% growth of the medical market. The S&P 500 Composite has risen 22.1% during the same time frame.
With healthy fundamentals and strong growth opportunities, this Zacks Rank #2 (Buy) company appears to be a solid wealth creator for its investors at the moment.
Draper, UT-headquartered HealthEquity provides integrated solutions for healthcare account management, health reimbursement arrangements and flexible spending accounts for health plans, insurance companies and third-party administrators in the United States. HealthEquity uses its innovative technology to manage consumers' tax-advantaged Heath Saving Accounts (HSAs) and other consumer-directed benefits offered by employers, including flexible spending accounts and health reimbursement arrangements.
Image Source: Zacks Investment Research
Factors Favoring HQY’s Growth
The rally in the company’s share price can be attributed to the sustained strength in its HSAs management business. The optimism led by a solid second-quarter fiscal 2025 performance and robust business potential are expected to contribute further.
HealthEquity exited second-quarter fiscal 2025 with better-than-expected results. The company witnessed solid top-line and bottom-line performances in the reported quarter. Solid growth in HSAs also drove the top line. The solid uptick in total HSA assets in the reported quarter is promising. The expansion of both margins also bodes well.
HQY has upped its revenue and earnings projections for fiscal 2025, which are also likely to have interested investors. For fiscal 2025, revenues are now projected to be between $1.17 billion and $1.19 billion, up from the previous outlook of $1.16 billion to $1.18 billion. Adjusted earnings per share (EPS) is now expected to be in the range of $2.98-$3.14, up from the earlier guidance of $2.93-$3.10.
During the second quarter of fiscal 2025, despite inflationary challenges, HealthEquity has experienced solid growth in HSA balances, driven by a significant increase in invested assets, which now represent a larger portion of total HSA assets. The growing number of members choosing to invest in HSAs reflects a positive trend. Additionally, more members are selecting enhanced rates on HSA cash, leading to improved and more consistent custodial yields. These are likely to have favored the stock’s growth.
The company's ongoing improvements in service technology, which have boosted the use of chat and automated responses, are contributing to greater efficiency. While the effects of COVID-19 may diminish in the second half, the positive results of the first two quarters indicate strong future service revenues and margins.
Factor That May Offset the Gains for HQY
HealthEquity deals with high levels of sensitive personal data and information. Any form of security breach might result in the loss of sensitive information, theft or loss of actual funds, litigation, or indemnity obligations to the customers. Notably, the company’s online platform is hosted from two data centers that are located in Draper, UT and Austin, TX.
Per a data breach notice, HealthEquity experienced a data breach that impacted around 4.3 million individuals. According to the data breach notice filed with the Maine Attorney General’s office, the breach occurred on March 9, 2024, and was discovered on June 26, 2024.
A Look at Estimates
HQY’s EPS for fiscal 2025 and 2026 is projected to grow 37.3% and 20.9%, respectively, to $3.09 and $3.73 on a year-over-year basis. The Zacks Consensus Estimate for earnings has expanded a cent for 2025 and 2026 in the past 30 days.
Revenues for fiscal 2025 and 2026 are anticipated to rise 18.2% and 11.8%, respectively, to $1.18 billion and $1.32 billion on a year-over-year basis.
Other Stocks to Consider
Some other top-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Baxter International Inc. (BAX - Free Report) and Boston Scientific Corporation (BSX - Free Report) .
DaVita, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 17.5%. DVA’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 24.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DaVita’s shares have gained 116.4% compared with the industry’s 38.3% rise in the past year.
Baxter, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 10%. BAX’s earnings surpassed estimates in each of the trailing four quarters, with the average being 3.7%.
Baxter has gained 15% compared with the industry’s 30.7% rise in the past year.
Boston Scientific, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 12.6%. BSX’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 7.2%.
Boston Scientific’s shares have rallied 74.7% compared with the industry’s 30.7% rise in the past year.
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HealthEquity Gains 28.3% YTD: What's Driving the Stock?
HealthEquity, Inc. (HQY - Free Report) witnessed strong momentum in the year-to-date period. Shares of the company rallied 28.3% compared with 6.5% growth of the medical market. The S&P 500 Composite has risen 22.1% during the same time frame.
With healthy fundamentals and strong growth opportunities, this Zacks Rank #2 (Buy) company appears to be a solid wealth creator for its investors at the moment.
Draper, UT-headquartered HealthEquity provides integrated solutions for healthcare account management, health reimbursement arrangements and flexible spending accounts for health plans, insurance companies and third-party administrators in the United States. HealthEquity uses its innovative technology to manage consumers' tax-advantaged Heath Saving Accounts (HSAs) and other consumer-directed benefits offered by employers, including flexible spending accounts and health reimbursement arrangements.
Image Source: Zacks Investment Research
Factors Favoring HQY’s Growth
The rally in the company’s share price can be attributed to the sustained strength in its HSAs management business. The optimism led by a solid second-quarter fiscal 2025 performance and robust business potential are expected to contribute further.
HealthEquity exited second-quarter fiscal 2025 with better-than-expected results. The company witnessed solid top-line and bottom-line performances in the reported quarter. Solid growth in HSAs also drove the top line. The solid uptick in total HSA assets in the reported quarter is promising. The expansion of both margins also bodes well.
HQY has upped its revenue and earnings projections for fiscal 2025, which are also likely to have interested investors. For fiscal 2025, revenues are now projected to be between $1.17 billion and $1.19 billion, up from the previous outlook of $1.16 billion to $1.18 billion. Adjusted earnings per share (EPS) is now expected to be in the range of $2.98-$3.14, up from the earlier guidance of $2.93-$3.10.
During the second quarter of fiscal 2025, despite inflationary challenges, HealthEquity has experienced solid growth in HSA balances, driven by a significant increase in invested assets, which now represent a larger portion of total HSA assets. The growing number of members choosing to invest in HSAs reflects a positive trend. Additionally, more members are selecting enhanced rates on HSA cash, leading to improved and more consistent custodial yields. These are likely to have favored the stock’s growth.
The company's ongoing improvements in service technology, which have boosted the use of chat and automated responses, are contributing to greater efficiency. While the effects of COVID-19 may diminish in the second half, the positive results of the first two quarters indicate strong future service revenues and margins.
Factor That May Offset the Gains for HQY
HealthEquity deals with high levels of sensitive personal data and information. Any form of security breach might result in the loss of sensitive information, theft or loss of actual funds, litigation, or indemnity obligations to the customers. Notably, the company’s online platform is hosted from two data centers that are located in Draper, UT and Austin, TX.
Per a data breach notice, HealthEquity experienced a data breach that impacted around 4.3 million individuals. According to the data breach notice filed with the Maine Attorney General’s office, the breach occurred on March 9, 2024, and was discovered on June 26, 2024.
A Look at Estimates
HQY’s EPS for fiscal 2025 and 2026 is projected to grow 37.3% and 20.9%, respectively, to $3.09 and $3.73 on a year-over-year basis. The Zacks Consensus Estimate for earnings has expanded a cent for 2025 and 2026 in the past 30 days.
Revenues for fiscal 2025 and 2026 are anticipated to rise 18.2% and 11.8%, respectively, to $1.18 billion and $1.32 billion on a year-over-year basis.
Other Stocks to Consider
Some other top-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Baxter International Inc. (BAX - Free Report) and Boston Scientific Corporation (BSX - Free Report) .
DaVita, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 17.5%. DVA’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 24.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DaVita’s shares have gained 116.4% compared with the industry’s 38.3% rise in the past year.
Baxter, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 10%. BAX’s earnings surpassed estimates in each of the trailing four quarters, with the average being 3.7%.
Baxter has gained 15% compared with the industry’s 30.7% rise in the past year.
Boston Scientific, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 12.6%. BSX’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 7.2%.
Boston Scientific’s shares have rallied 74.7% compared with the industry’s 30.7% rise in the past year.