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HealthEquity's (HQY) Preliminary Q4 Results Cheer Investors

Zacks Equity Research

Prior to the fiscal fourth-quarter earnings release, HealthEquity, Inc. HQY announced preliminary results for fiscal 2019, wherein the total number of HSAs (Health Savings Account) for which it serves as a non-bank custodian was 4 million. This reflects an increase of 17% from fiscal 2018.

Investors Cheerful

HealthEquity’s fiscal fourth-quarter preliminary results seem to impress investors. Following the announcement, share price of this Zacks Rank #3 (Hold) company climbed 2.2% to $66.45 at close.

If the company manages to outpace the Zacks Consensus Estimate in the fiscal fourth quarter, it will mark the second consecutive quarterly beat.

Over the past month, shares of HealthEquity have rallied 25.7%, higher than the industry's 12.5% growth. The current level is also higher than the S&P 500’s rally of 6.4%.

HSA Details

By the end of fiscal 2019, total custodial assets held by HSA Members totaled $8.1 billion, up 19% from the earlier year.

HealthEquity, Inc. Price and Consensus

 

HealthEquity, Inc. Price and Consensus | HealthEquity, Inc. Quote

In fiscal 2019, the company set a record by opening 674,000 new HSAs which helped HAS members add $1.3 billion worth of custodial assets.

Outlook

For fiscal 2019, management at HealthEquity anticipates revenues within $284 million and $287 million. The midpoint of the latest guidance of $285.5 million is above the Zacks Consensus Estimate of $284.3 million.

Adjusted earnings per share are projected between $1.13 and $1.17, higher than the Zacks Consensus Estimate of $1.12.

Additionally, the company provided fiscal 2020 revenue guidance. Revenues are expected in the range of $333 million to $339 million, below the Zacks Consensus Estimate of $341.3 million.

Key Picks

A few better-ranked stocks in the broader medical space arePenumbra, Inc. PEN, Wright Medical Group N.V. WMGI and DexCom. Inc. DXCM.Each of these stocks currently carries a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Penumbra’s long-term earnings growth rate is expected at 20%.

Wright Medical’s long-term earnings growth rate is expected at 11%.

DexCom’s next-quarter earnings per share are projected to grow at 56.3%.

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