HealthEquity (HQY) Stock Forecast & Price Target

HealthEquity Inc. has demonstrated a robust financial performance, with custodial revenue increasing by 15.3% year-over-year to $159.9 million, accounting 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 reported a total revenue growth of 7.2% for Q3/26, reaching $322.2 million, largely propelled by the same strong custodial revenue growth and surpassing estimates. Additionally, total accounts rose to 17.280 million, reflecting a 5.0% year-over-year increase, which bolsters long-term growth prospects in its consumer-directed benefits segment.

HealthEquity's stock is facing a negative outlook due to its current valuation, which trades at 6.4x FY/26 revenue and 15.1x FY/26 adjusted EBITDA, significantly below the averages of comparable high-growth SaaS companies at 7.6x and 29.7x, respectively. Despite expected revenue growth of 8.9% year-over-year to $1.309 billion and adjusted EBITDA growth of 17.8% year-over-year, these growth rates and estimates have been revised downward in recent updates, indicating potential challenges ahead. Additionally, the company's financial performance was adversely affected by a substantial one-time legal settlement, further dampening investor sentiment.