KeyBanc raises HealthEquity share target, bullish on custodial yields, AI use

Must read

KeyBanc raises HealthEquity share target, bullish on custodial yields, AI use © Reuters.

On Thursday, KeyBanc lifted its price target on shares of HealthEquity, Inc (NASDAQ: HQY), a leading provider of Health Savings Accounts (HSAs), from $85.00 to $95.00. The firm also kept its Overweight rating on the stock. The adjustment follows a conference where the management of HealthEquity participated and comes on the heels of a robust earnings report that surpassed bottom-line expectations.

The company’s management team presented at KeyBanc’s annual LSMT conference, which took place yesterday. The positive adjustment in the price target is attributed to the company’s solid performance and the anticipation of increased custodial yields. KeyBanc’s analysis suggests that enhanced rate products, which currently exceed 30% of the business, are expected to continue their upward trend, potentially reaching around 60% by 2027.

HealthEquity is recognized for its strategic position in the HSA market, where it aims to expand its revenue through market share gains, both organically and through strategic acquisitions. The company is also focusing on growing its enhanced rate business and utilizing artificial intelligence to boost both revenue and profitability. The analyst from KeyBanc highlighted HealthEquity’s strong cash position, which is seen as a driver for potential multiple expansion, contributing to the Overweight rating.

The new price target of $95 reflects the firm’s confidence in HealthEquity’s execution capabilities and its potential for multiple expansion. This target is based on the company’s stock trading at 7.5 times the firm’s fiscal year 2025 revenue estimate and 20 times the fiscal year 2025 adjusted EBITDA estimate.

The current trading multiple of approximately 17 times next twelve months (NTM) enterprise value to adjusted EBITDA is viewed as a discount compared to the company’s historical pre-WAGE multiple, which ranged between 30 to 40 times.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

More articles

Latest article