Stan Berenshteyn, an analyst from Wells Fargo, maintained the Buy rating on Healthequity (HQY – Research Report). The associated price target is $93.00.
Stan Berenshteyn’s rating is based on a thorough analysis of Healthequity’s financial prospects and market position. Berenshteyn identifies the steady month-over-month performance and the company’s significant year-to-date advance of 25% compared to the S&P’s 8% as indicative of market confidence. Healthequity’s stock has also outperformed on a year-over-year basis, rising 44% versus the S&P’s 32% gain. This growth is attributed primarily to improvements in the company’s near-term EBITDA estimates, rather than just expansion of valuation multiples. Moreover, the current interest rate environment is seen as a positive influence on the company’s financial estimates through at least the fiscal year 2027, providing a solid foundation for the Buy rating.
Additionally, Healthequity’s strategic shift in asset management is highlighted as a factor in the Buy recommendation. The company is moving towards a greater allocation of assets under management towards annuities, which is expected to grow from approximately 30% to 40% by the end of fiscal 2024 and to about 80% in the longer term. This transition is anticipated to yield incremental financial tailwinds beyond FY27 due to enhanced rate spreads. The company’s ability to capitalize on the yield premium over traditional banking products, such as Jumbo CDs, by pivoting towards annuities suggests a potential for increased portfolio duration and enhanced custodial revenue, further justifying the optimistic outlook on Healthequity’s stock.
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Based on the recent corporate insider activity of 56 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of HQY in relation to earlier this year.
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Healthequity (HQY) Company Description:
HealthEquity, Inc. provides range of solutions for managing health care accounts. The firm’s offers its solutions for employers, health planbs, brokers, consultants and financial advisors. Its services include HAS, FSA, HRA, DCRA, 401(k), Commuter, COBRA and HIA. It also offers products like healthcare saving and spending platform, health savings accounts, investment advisory services, reimbursement arrangements, and healthcare incentives. The company was founded by Stephen D. Neeleman on September 18, 2002 and is headquartered in Draper, UT.
Read More on HQY:
- HealthEquity Expands HSA Market Share with Strategic Acquisition
- HealthEquity Sets Date to Announce Fiscal Year End Results
- HealthEquity price target raised to $100 from $85 at Barrington
- HealthEquity price target raised to $90 from $77 at RBC Capital
- HealthEquity raises FY24 EPS view to $2.20-$2.24 from $2.08-$2.16
