HealthEquity (HQY) Stock Forecast & Price Target

HealthEquity Inc demonstrated a positive financial trajectory with custodial revenue increasing by 13% year-over-year, contributing to a notably strong adjusted EBITDA margin of 44.0%, up 466 basis points year-over-year. Cash flow from operations also exhibited substantial growth, rising 28.4% to $339.2 million in FY/26 compared to $264.1 million in FY/25. Additionally, the company reported total revenue of $322.2 million in Q3/26, reflecting a 7.2% increase fueled by robust growth in custodial revenue and a total HSA assets expansion of 13.6% year-over-year, which indicates deepening customer engagement and higher account balances.

HealthEquity's projected revenue for FY/27 has been slightly reduced to $1.410 billion, reflecting a modest 7.4% year-over-year growth, and adjusted EBITDA estimates have also been scaled back to $623.3 million despite a positive EPS forecast. The company's shares have declined by 13% year-to-date, now trading at a valuation multiples that are relatively high compared to its growth peers and its historical averages. Additional headwinds such as competitive pressures in the HSA industry, regulatory uncertainties, and risks associated with cyberattacks and debt further contribute to a negative outlook on HealthEquity's stock.