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Is HealthEquity Stock a Hold Now Amid Strong Top-Line Growth?
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HealthEquity, Inc. (HQY - Free Report) has been gaining from its business model and strategy. The optimism led by a solid first-quarter fiscal 2025 performance and strength in Health Savings Accounts (HSA) are expected to contribute further. However, stiff competition and the possibility that integration of acquisitions may be unsuccessful are major downsides.
Over the past year, this Zacks Rank #3 (Hold) stock has gained 11.8% compared with the industry’s 10.1% growth and the S&P 500’s 26.7% rise.
The renowned provider of technology-enabled services platforms for healthcare savings and spending decisions has a market capitalization of $6.67 billion. The company projects 28% growth for the next five years and expects to witness continued improvements in its business. HealthEquity’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 17.2%.
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Key Drivers for HQY Stock’s Top Line
Unique Investment Platform: HealthEquity offers multiple cloud-based platforms, accessed by its members online via a desktop or mobile device. Individuals can make health saving and spending decisions, and pay healthcare bills, among other activities, via these platforms. These platforms provide users access to services provided by HQY and third parties selected by HealthEquity or its Network Partners. Among other features, HealthEquity’s HSA platform has the capability to provide users with medical bills upon adjudication by a health plan, including details, such as the amount paid by insurance.
As of Jan. 31, 2024, HealthEquity’s platforms were integrated with more than 200 Network Partners and are currently serving more than 120,000 clients.
Strength in HSA: HealthEquity’s total number of HSAs, as of April 30, 2024, rose 13.1% year over year. HealthEquity reported 665,000 HSAs with investments as of April 30, 2024, up 19.6% year over year. Total Accounts, as of April 30, 2024, were up 6.7% year over year. This uptick included total HSAs and 6.9 million other consumer-directed benefits (CDB). Total HSA assets as of Apr 30, 2024, were up 22.2% year over year. This included HSA cash and HSA investments.
Strong Q1 Results: HealthEquity exited first-quarter fiscal 2025 with better-than-expected results. The company witnessed solid top-line and bottom-line performances in the reported quarter. The top line benefited from robust contributions from all its revenue sources. Solid growth in HSAs also drove the top line.Management’s expectations of the impacts of the BenefitWallet HSA portfolio acquisition raise optimism.
Downsides for HQY
Data Security Issues: HealthEquity deals with high level of sensitive personal data and information. Any form of security breaches 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.
Stiff Competition: The competitive landscape for medical services is dynamic and fragmented, posing a serious threat to HealthEquity. Key elements influencing a business' performance include the willingness of customers to use HSAs and other CDBs more frequently, as well as the ability of the business to increase engagement and persuade both present and potential customers of the advantages of its services.
Estimate Trend
HealthEquity has been witnessing a positive estimate revision trend for fiscal 2025. Over the past 90 days, the Zacks Consensus Estimate for its earnings per share has moved 3.4% north to $3.00.
The Zacks Consensus Estimate for second-quarter fiscal 2025 revenues is pegged at $284.5 million, implying a 16.8% rise from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Universal Health Service (UHS - Free Report) , Quest Diagnostics (DGX - Free Report) and ABM Industries (ABM - Free Report) . While Universal Health Service sports a Zacks Rank #1 (Strong Buy), Quest Diagnostics and ABM Industries carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Universal Health Service has an estimated long-term growth rate of 19%. UHS’ earnings surpassed estimates in each of the trailing four quarters, with the average being 14.58%.
Universal Health Service has gained 41.1% compared with the industry's 34.8% growth so far this year.
Quest Diagnostics has an estimated long-term growth rate of 6.20%. DGX’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 3.31%.
Quest Diagnostics’ shares have gained 3.7% so far this year compared with the industry’s 10.2% growth.
ABM Industries’ earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 7.34%.
ABM's shares have risen 24.1% so far this year compared with the industry’s 11.9% growth.
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Is HealthEquity Stock a Hold Now Amid Strong Top-Line Growth?
HealthEquity, Inc. (HQY - Free Report) has been gaining from its business model and strategy. The optimism led by a solid first-quarter fiscal 2025 performance and strength in Health Savings Accounts (HSA) are expected to contribute further. However, stiff competition and the possibility that integration of acquisitions may be unsuccessful are major downsides.
Over the past year, this Zacks Rank #3 (Hold) stock has gained 11.8% compared with the industry’s 10.1% growth and the S&P 500’s 26.7% rise.
The renowned provider of technology-enabled services platforms for healthcare savings and spending decisions has a market capitalization of $6.67 billion. The company projects 28% growth for the next five years and expects to witness continued improvements in its business. HealthEquity’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 17.2%.
Image Source: Zacks Investment Research
Key Drivers for HQY Stock’s Top Line
Unique Investment Platform: HealthEquity offers multiple cloud-based platforms, accessed by its members online via a desktop or mobile device. Individuals can make health saving and spending decisions, and pay healthcare bills, among other activities, via these platforms. These platforms provide users access to services provided by HQY and third parties selected by HealthEquity or its Network Partners. Among other features, HealthEquity’s HSA platform has the capability to provide users with medical bills upon adjudication by a health plan, including details, such as the amount paid by insurance.
As of Jan. 31, 2024, HealthEquity’s platforms were integrated with more than 200 Network Partners and are currently serving more than 120,000 clients.
Strength in HSA: HealthEquity’s total number of HSAs, as of April 30, 2024, rose 13.1% year over year. HealthEquity reported 665,000 HSAs with investments as of April 30, 2024, up 19.6% year over year. Total Accounts, as of April 30, 2024, were up 6.7% year over year. This uptick included total HSAs and 6.9 million other consumer-directed benefits (CDB). Total HSA assets as of Apr 30, 2024, were up 22.2% year over year. This included HSA cash and HSA investments.
Strong Q1 Results: HealthEquity exited first-quarter fiscal 2025 with better-than-expected results. The company witnessed solid top-line and bottom-line performances in the reported quarter. The top line benefited from robust contributions from all its revenue sources. Solid growth in HSAs also drove the top line.Management’s expectations of the impacts of the BenefitWallet HSA portfolio acquisition raise optimism.
Downsides for HQY
Data Security Issues: HealthEquity deals with high level of sensitive personal data and information. Any form of security breaches 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.
Stiff Competition: The competitive landscape for medical services is dynamic and fragmented, posing a serious threat to HealthEquity. Key elements influencing a business' performance include the willingness of customers to use HSAs and other CDBs more frequently, as well as the ability of the business to increase engagement and persuade both present and potential customers of the advantages of its services.
Estimate Trend
HealthEquity has been witnessing a positive estimate revision trend for fiscal 2025. Over the past 90 days, the Zacks Consensus Estimate for its earnings per share has moved 3.4% north to $3.00.
The Zacks Consensus Estimate for second-quarter fiscal 2025 revenues is pegged at $284.5 million, implying a 16.8% rise from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Universal Health Service (UHS - Free Report) , Quest Diagnostics (DGX - Free Report) and ABM Industries (ABM - Free Report) . While Universal Health Service sports a Zacks Rank #1 (Strong Buy), Quest Diagnostics and ABM Industries carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Universal Health Service has an estimated long-term growth rate of 19%. UHS’ earnings surpassed estimates in each of the trailing four quarters, with the average being 14.58%.
Universal Health Service has gained 41.1% compared with the industry's 34.8% growth so far this year.
Quest Diagnostics has an estimated long-term growth rate of 6.20%. DGX’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 3.31%.
Quest Diagnostics’ shares have gained 3.7% so far this year compared with the industry’s 10.2% growth.
ABM Industries’ earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 7.34%.
ABM's shares have risen 24.1% so far this year compared with the industry’s 11.9% growth.