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Here's Why You Should Add HealthEquity (HQY) to Portfolio Now

Zacks Equity Research

HealthEquity, Inc. HQY is likely to gain from solid prospects in Health Savings Account (“HSA") business.

Shares of this company have rallied 11% against the industry’s 11.1% decline in a year’s time. Meanwhile, the S&P 500 index has risen 23.8% over the same time frame.

This $5-billion health-care account management company currently has a Zacks Rank #2 (Buy). HealthEquity’s earnings are expected to grow 25% in the next five years. Also, the company has a trailing four-quarter positive earnings surprise of 46.4%, on average.

The stock also has a Momentum Score of A. Our research shows that stocks with a Momentum Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, are better picks than most.

Let’s take a closer look at the factors working in favor of the company right now.

Strength in HSA & Guidance

HealthEquity is an Internal Revenue Service approved non-bank custodian of HSA, which is a medical savings account available to taxpayers in the United States.

As of Oct 31, 2019, the total number of HSAs for which HealthEquity served as a non-bank custodian was 5 million.

HealthEquity clinched the top position in the HSA industry through its first-mover advantage, focus on innovation and differentiated capabilities.

The company’s market share (measured by custodial assets) has literally tripled from 4% in December 2010 to 13% in December 2018, per the 2018 Devenir HSA Research Report. Currently, HealthEquity is the third-largest HSA custodian in terms of market share.

HealthEquity, Inc. Price and Consensus

HealthEquity, Inc. Price and Consensus

HealthEquity, Inc. price-consensus-chart | HealthEquity, Inc. Quote

Devenir further suggests that the HSA market will reach a worth of $88 billion in HSA assets held over by 30 million accounts by 2021-end.

Driven by the solid aspects, the company recently raised its fiscal 2020 revenue expectations.

Notably, HealthEquity now expects revenues between $520 million and $526 million, much higher than the earlier projected range of $341-$347 million.

Adjusted net income is projected between $101 million and $105 million, much above the earlier stated range of $76-$80 million.
Adjusted earnings per share (EPS) for fiscal 2020 are expected within $1.46-$1.52, compared to $1.10-$1.16 issued earlier.

Estimates Scenario

For fiscal 2020, the Zacks Consensus Estimate for revenues is pegged at $524.1 million, suggesting a year-over-year upside of 82.5%. For adjusted EPS, the same stands at $1.50 per share, indicating growth of 26.1% from the year-ago reported figure.

Other Stocks to Consider

Other top-ranked stocks in the broader medical space are Cerner Corporation CERN, Intuitive Surgical ISRG and DexCom DXCM, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cerner’s long-term earnings growth rate is estimated at 13.6%.

Intuitive Surgical’s long-term earnings growth rate is projected at 11.8%.

DexCom’s fourth-quarter earnings growth rate is estimated at 31.5%.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>


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