HealthEquity (HQY): Revisiting Valuation After a Flat Month and Ongoing Earnings Growth

HealthEquity (HQY) has been treading water lately, with the stock roughly flat over the past month after a modest 3 month climb. That makes this a good moment to revisit what is driving the story.

See our latest analysis for HealthEquity.

Over the past year, HealthEquity’s share price return has been slightly negative even as its multi year total shareholder return remains strong. This suggests that recent weakness may be more about shifting risk sentiment than fundamentals.

If HealthEquity’s pause has you rethinking your exposure to medical names, this could be a good moment to explore other healthcare stocks that might fit your strategy.

With earnings still growing briskly and the share price lagging both analyst targets and intrinsic estimates, the key question now is whether HealthEquity is quietly undervalued or if the market is already pricing in its next leg of growth.

Most Popular Narrative: 22.8% Undervalued

Compared with the last close at $94.51, the most followed narrative sees HealthEquity’s fair value materially higher, grounded in structural HSA market expansion and rising profitability.

The recent regulatory expansion, allowing direct primary care, pre deductible telehealth, and millions of new ACA bronze/catastrophic plan members to qualify for HSAs, creates the largest addressable market increase in two decades, poised to accelerate new account openings and AUM growth, meaningfully boosting future revenue.

Read the complete narrative.

Want to see how this boom in eligible HSA members turns into hard numbers? The narrative leans on climbing margins, accelerating earnings, and a rich future multiple. Curious which specific growth and profitability assumptions make that higher valuation pencil out?

Result: Fair Value of $122.36 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, this hinges on a healthy labor market and supportive interest rates, as weaker hiring or falling yields could quickly undermine those upbeat projections.

Find out about the key risks to this HealthEquity narrative.

Another Lens on Valuation

Our SWS DCF model estimates fair value near $177.13, which is around 46.6% above the current $94.51 share price. If cash flows really are this strong, this raises the question of whether the market is simply too cautious on HealthEquity’s long runway.

Look into how the SWS DCF model arrives at its fair value.

Build Your Own HealthEquity Narrative

If you see the numbers differently or want to stress test your own assumptions, you can build a complete narrative in minutes: Do it your way

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding HealthEquity.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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