HealthEquity (HQY) Stock Forecast & Price Target

HealthEquity Inc. reported strong financial performance with custodial revenue increasing by 15.3% year-over-year, reaching $159.9 million, which accounted for 49.1% of Q2/26 revenue, driven by a rise in average annualized yield on HSA cash and an increase in average daily balances. The company's total revenues for the third quarter increased by 7.2% to $322.2 million, surpassing both internal estimates and consensus projections, primarily due to continued vigorous growth in custodial revenue. Additionally, total accounts increased by 5.0% year-over-year to 17.280 million, including a growth in consumer-directed benefit accounts, indicating a robust demand for HealthEquity’s services and solidifying a positive outlook for the company's financial trajectory.

HealthEquity Inc. is facing a negative outlook due to its stock trading at a lower valuation relative to its high-growth SaaS peers, with a current multiple of 6.4x FY/26 revenue estimates and 15.1x adjusted EBITDA, compared to peers at 7.6x and 29.7x, respectively. Additionally, the company reported a decline in stock performance, with shares down 7% year-to-date despite a substantial rise previously, and the impact of a $30 million one-time legal settlement reflecting potential volatility in its financials. Revenue estimates for FY/27 were slightly reduced to $1.417 billion, showing a modest 8.3% year-over-year growth, which raises concerns about the company's growth trajectory amidst an overall challenging market environment.