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HealthEquity (HQY) Stock Up on Solid Fiscal 2020 Results

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HealthEquity HQY recently announced total accounts and Health Savings Account (“HSA”) assets for the fiscal year ended Jan 31, 2020. Per Barrington Research, the company is expected to report full-year and fourth-quarter fiscal 2020 results on Mar 17.

Following the release, shares of the Zacks Rank #3 (Hold) company shot up 10.7% to $86.63 at close.

HSA Member Details

As of Jan 31, 2020, the total number of HSAs for which HealthEquity serves as a non-bank custodian was 5.3 million, highlighting an increase of 34% from fiscal 2019. In fact, HealthEquity exited fiscal 2020 with 12.8 million total accounts, up 180% from fiscal 2019. Per management, the massive surge is attributable to the acquisition of WageWorks.

Also, HSA Assets grew to $11.5 billion, up 43% from a year earlier.

FY20 Guidance Raised

Based on the aforementioned results, HealthEquity raised its fiscal 2020 guidance.

Revenues are expected within $530-$532 million compared with the previously-projected band of $520-$526 million. The Zacks Consensus Estimate for revenues is pegged at $524.1 million.

Net income is projected in the range of $39-$41 million, while the same for adjusted EBITDA is at $194-$196 million.

Adjusted earnings per share are anticipated between $1.71 and $1.73. This compares to the previously announced range of $1.46-$1.52. The Zacks Consensus Estimate for the same is pinned at $1.50.

FY21 View

For fiscal 2021, the company expects revenues within $812-$820 million. The Zacks Consensus Estimate stands at $823.7 million.

Price Performance

Over the past year, the stock has rallied 8.2% against the industry’s 16.4% decline.

Wrapping Up

With solid HSA member growth, HealthEquity has exited fiscal 2020 on a strong note. Solid growth in HSAs and custodial assets are expected to have bolstered the company’s top-line performance. Reflective of these, the company further raised its fiscal 2020 guidance. HealthEquity also issued an impressive view for fiscal 2021. Management is also optimistic about the WageWorks acquisition which drove total number of accounts in fiscal 2020.

Key Picks

Some better-ranked stocks in the broader medical space are AmerisourceBergen Corporation ABC, Cardinal Health CAH and Patterson Companies PDCO, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AmerisourceBergen’s long-term earnings are expected to grow 7.4%.

Cardinal Health’s long-term earnings are projected to rise 6.2%.

Patterson long-term earnings are estimated to climb 6.4%.

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