HealthEquity: Conservative Guidance, Custodial Yield Tailwinds, and Efficiency Gains Support Buy-Rated Upside

Bank of America Securities analyst Allen Lutz maintained a Buy rating on Healthequity yesterday and set a price target of $125.00.

Allen Lutz has given his Buy rating due to a combination of factors that support a positive long‑term outlook for HealthEquity despite initially cautious guidance. While the newly issued FY27 revenue and EBITDA forecasts came in slightly below consensus at the midpoint, he interprets this as consistent with the company’s historical pattern of conservative first-time guidance. Current FY26 guidance was reaffirmed, and recent trends show that actual revenue and EBITDA performance have already moved meaningfully above last year’s initial targets, suggesting room for upward revisions as the year progresses. Lutz also highlights the expected benefits from ongoing efficiency gains in service delivery and the scalability of the model as custodial cash yields remain supportive.

He views macro headwinds from softer U.S. employment as having only limited near-term earnings impact, while the structure of HealthEquity’s custodial portfolio constrains downside risk to FY27 yields since most relevant assets are already placed or will be shortly. Looking further ahead, he expects FY28 to benefit from a notable step-up in custodial yields as a larger volume of assets reprices, creating a catalyst for stronger margin expansion than implied by current guidance. In addition, he sees potential upside from technology and automation investments that can enhance service efficiency and allow management to balance growth initiatives with operating leverage. Taken together—with shares trading below his $125 price objective—these dynamics underpin Lutz’s view that HQY offers an attractive risk‑reward profile, justifying a Buy rating.

In another report released today, TipRanks – Anthropic also reiterated a Buy rating on the stock with a $110.00 price target.

Based on the recent corporate insider activity of 60 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of HQY in relation to earlier this year.