Promising Growth Outlook for Healthequity Driven by Legislative Progress and Market Expansion

Wells Fargo analyst Stan Berenshteyn has maintained their bullish stance on HQY stock, giving a Buy rating yesterday.

Stan Berenshteyn has given his Buy rating due to a combination of factors that suggest a promising outlook for Healthequity’s growth. One of the key drivers is the legislative progress in Congress, which includes HSA-friendly provisions that are expected to significantly expand Healthequity’s addressable market. This expansion is anticipated to lead to sustained double-digit revenue growth, excluding impacts from Treasury rates.
Furthermore, Berenshteyn highlights the potential for a substantial increase in Healthequity’s organic client growth. The legislative changes are expected to remove barriers to HSA adoption, thereby increasing the pool of potential HSA members and enhancing conversion rates. This could result in an estimated 240,000 additional members per year, supporting a long-term compound annual growth rate in HSA membership and revenue. The analysis also suggests a mid-teen growth rate for EBITDA, making Healthequity a compelling investment opportunity.

In another report released yesterday, RBC Capital also initiated coverage with a Buy rating on the stock with a $112.00 price target.