We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties. You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies. In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Here's Why You Should Retain HealthEquity Stock in Your Portfolio Now
Read MoreHide Full Article
HealthEquity, Inc. (HQY - Free Report) has been gaining from its business model and strategy. The optimism, led by a solid third-quarter fiscal 2025 performance and strength in Health Savings Accounts (HSA), is expected to contribute further. However, stiff competition and data security issues are major concerns.
In the past six months, the Zacks Rank #3 (Hold) company’s shares have risen 25.7% against a 12.9% decline of the industry. The S&P 500 has increased 4.6% during the said time frame.
The renowned provider of technology-enabled services platforms for healthcare savings and spending decisions has a market capitalization of $8.72 billion. The company projects 24.6% growth for the next five years and expects to witness continued improvements in its business. HealthEquity’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 16.61%.
Image Source: Zacks Investment Research
Reasons Favoring HQY’s Growth
Business Model and Strategy: We have a positive outlook on HealthEquity’s business model, which follows a business-to-business-to-consumer (B2B2C) distribution strategy. The company sees substantial opportunities to broaden its service offerings for existing clients. According to HealthEquity’s management, its diverse distribution network enables it to attract new clients and network partners. The sales team engages with enterprise and regional employers across various industries in the United States and potential network partners, including health plans, benefits administrators, and retirement plan record keepers.
Strength in HSA: During the third quarter of fiscal 2025, despite inflationary challenges, HealthEquity experienced solid growth in HSA balances, driven by a significant increase in invested assets, which now represent a larger portion of total HSA assets.
HealthEquity’s total number of HSAs, as of Oct. 31, 2024, rose 15% year over year. As of Oct. 31, 2024, the company reported 717,000 HSAs with investments. The figure rose 21% year over year. Total accounts, as of Oct. 31, 2024, also increased 7.8% on a year-over-year basis. This uptick included total HSAs and 7 million other consumer-directed benefits. Total HSA assets as of Oct. 31, 2024, rose 33% year over year. This included HSA cash and investments.
Strong Q3 Results: HealthEquity saw solid top-and-bottom-line performances in the third quarter of fiscal 2025. Solid growth in HSAs also drove the top line. The solid uptick in total HSA assets in the reported quarter looks promising. The expansion of both margins also bodes well.
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. HealthEquity has raised its revenue and earnings guidance for fiscal 2025 on its third-quarter earnings call, signaling confidence in its ongoing growth trajectory.
Factors That May Offset HQY’s Gains
Data Security Issues: HealthEquity deals with high levels of sensitive personal data and information. Therefore, its ability to ensure the security of its technology platforms and, thus, sensitive customer and partner information is critical to its operations. Any form of security breach might result in loss of sensitive information, theft or loss of actual funds, litigation and performance of indemnity obligations to customers. Any consequent legal claims or proceedings could disrupt HealthEquity’s operations, damage its reputation and cause a loss of confidence in the company’s products and services, thus adversely affecting its business.
The company’s online platform is hosted from two data centers in Draper, UT and Austin, TX. Earlier this year, 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.
Stiff Competition: HealthEquity faces stiff competition in the rapidly evolving and fragmented medical services market. The company’s success, to a substantial extent, depends on consumers' willingness to increase their use of HSAs and other CDBs, as well as its ability to increase engagement and demonstrate the value of its services to existing and potential clients.
Estimate Trend
HealthEquity has been witnessing a stable estimate revision trend for fiscal 2025. Over the past 60 days, the Zacks Consensus Estimate for earnings per share (EPS) has remained stable at $3.15.
The Zacks Consensus Estimate for fourth-quarter fiscal 2025 revenues is pegged at $305.1 million, implying a 16.3% rise from the year-ago reported number. The consensus mark for EPS is pinned at 71 cents, implying a 12.7% improvement year over year.
Masimo’s shares have rallied 30.1% in the past year. Estimates for MASI’s 2024 earnings per share (EPS) have increased 1.2% to $4.10 in the past 30 days. MASI’s earnings beat estimates in each of the trailing four quarters, the average surprise being 17.1%. In the last reported quarter, it posted an earnings surprise of 16.6%.
Estimates for Boston Scientific’s 2025 EPS have jumped 2.9% to $2.85 in the past 30 days. Shares of the company have surged 56.7% in the past year compared with the industry’s growth of 12.5%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.25%. In the last reported quarter, it delivered an earnings surprise of 7.69%.
Estimates for Cardinal Health’s fiscal 2025 EPS have increased 1.5% to $7.94 in the past 30 days. Shares of the company have gained 15.2% in the past year against the industry’s 4.1% decline. CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 9.6%. In the last reported quarter, it delivered an earnings surprise of 10.3%.
Zacks' 7 Best Strong Buy Stocks (New Research Report)
Valued at $99, click below to receive our just-released report predicting the 7 stocks that will soar highest in the coming month.
Image: Bigstock
Here's Why You Should Retain HealthEquity Stock in Your Portfolio Now
HealthEquity, Inc. (HQY - Free Report) has been gaining from its business model and strategy. The optimism, led by a solid third-quarter fiscal 2025 performance and strength in Health Savings Accounts (HSA), is expected to contribute further. However, stiff competition and data security issues are major concerns.
In the past six months, the Zacks Rank #3 (Hold) company’s shares have risen 25.7% against a 12.9% decline of the industry. The S&P 500 has increased 4.6% during the said time frame.
The renowned provider of technology-enabled services platforms for healthcare savings and spending decisions has a market capitalization of $8.72 billion. The company projects 24.6% growth for the next five years and expects to witness continued improvements in its business. HealthEquity’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 16.61%.
Image Source: Zacks Investment Research
Reasons Favoring HQY’s Growth
Business Model and Strategy: We have a positive outlook on HealthEquity’s business model, which follows a business-to-business-to-consumer (B2B2C) distribution strategy. The company sees substantial opportunities to broaden its service offerings for existing clients. According to HealthEquity’s management, its diverse distribution network enables it to attract new clients and network partners. The sales team engages with enterprise and regional employers across various industries in the United States and potential network partners, including health plans, benefits administrators, and retirement plan record keepers.
Strength in HSA: During the third quarter of fiscal 2025, despite inflationary challenges, HealthEquity experienced solid growth in HSA balances, driven by a significant increase in invested assets, which now represent a larger portion of total HSA assets.
HealthEquity’s total number of HSAs, as of Oct. 31, 2024, rose 15% year over year. As of Oct. 31, 2024, the company reported 717,000 HSAs with investments. The figure rose 21% year over year. Total accounts, as of Oct. 31, 2024, also increased 7.8% on a year-over-year basis. This uptick included total HSAs and 7 million other consumer-directed benefits. Total HSA assets as of Oct. 31, 2024, rose 33% year over year. This included HSA cash and investments.
Strong Q3 Results: HealthEquity saw solid top-and-bottom-line performances in the third quarter of fiscal 2025. Solid growth in HSAs also drove the top line. The solid uptick in total HSA assets in the reported quarter looks promising. The expansion of both margins also bodes well.
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. HealthEquity has raised its revenue and earnings guidance for fiscal 2025 on its third-quarter earnings call, signaling confidence in its ongoing growth trajectory.
Factors That May Offset HQY’s Gains
Data Security Issues: HealthEquity deals with high levels of sensitive personal data and information. Therefore, its ability to ensure the security of its technology platforms and, thus, sensitive customer and partner information is critical to its operations. Any form of security breach might result in loss of sensitive information, theft or loss of actual funds, litigation and performance of indemnity obligations to customers. Any consequent legal claims or proceedings could disrupt HealthEquity’s operations, damage its reputation and cause a loss of confidence in the company’s products and services, thus adversely affecting its business.
The company’s online platform is hosted from two data centers in Draper, UT and Austin, TX. Earlier this year, 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.
Stiff Competition: HealthEquity faces stiff competition in the rapidly evolving and fragmented medical services market. The company’s success, to a substantial extent, depends on consumers' willingness to increase their use of HSAs and other CDBs, as well as its ability to increase engagement and demonstrate the value of its services to existing and potential clients.
Estimate Trend
HealthEquity has been witnessing a stable estimate revision trend for fiscal 2025. Over the past 60 days, the Zacks Consensus Estimate for earnings per share (EPS) has remained stable at $3.15.
The Zacks Consensus Estimate for fourth-quarter fiscal 2025 revenues is pegged at $305.1 million, implying a 16.3% rise from the year-ago reported number. The consensus mark for EPS is pinned at 71 cents, implying a 12.7% improvement year over year.
Key Picks
Some better-ranked stocks in the broader medical space are Masimo (MASI - Free Report) , Boston Scientific (BSX - Free Report) and Cardinal Health (CAH - Free Report) . At present, Masimo sports a Zacks Rank #1 (Strong Buy), whereas Boston Scientific and Cardinal Health carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Masimo’s shares have rallied 30.1% in the past year. Estimates for MASI’s 2024 earnings per share (EPS) have increased 1.2% to $4.10 in the past 30 days. MASI’s earnings beat estimates in each of the trailing four quarters, the average surprise being 17.1%. In the last reported quarter, it posted an earnings surprise of 16.6%.
Estimates for Boston Scientific’s 2025 EPS have jumped 2.9% to $2.85 in the past 30 days. Shares of the company have surged 56.7% in the past year compared with the industry’s growth of 12.5%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.25%. In the last reported quarter, it delivered an earnings surprise of 7.69%.
Estimates for Cardinal Health’s fiscal 2025 EPS have increased 1.5% to $7.94 in the past 30 days. Shares of the company have gained 15.2% in the past year against the industry’s 4.1% decline. CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 9.6%. In the last reported quarter, it delivered an earnings surprise of 10.3%.