Is Now An Opportune Moment To Examine HealthEquity, Inc. (NASDAQ:HQY)?

While HealthEquity, Inc. (NASDAQ:HQY) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$78.50 at one point, and dropping to the lows of US$57.65. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether HealthEquity's current trading price of US$63.27 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at HealthEquity’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out the opportunities and risks within the US Healthcare industry.

What's The Opportunity In HealthEquity?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 16.80% above my intrinsic value, which means if you buy HealthEquity today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $54.17, then there isn’t really any room for the share price grow beyond what it’s currently trading. In addition to this, HealthEquity has a low beta, which suggests its share price is less volatile than the wider market.

What does the future of HealthEquity look like?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. In the upcoming year, HealthEquity's earnings are expected to increase by 67%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? HQY’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on HQY, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you want to dive deeper into HealthEquity, you'd also look into what risks it is currently facing. For example, we've found that HealthEquity has 2 warning signs (1 is concerning!) that deserve your attention before going any further with your analysis.

If you are no longer interested in HealthEquity, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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.