HealthEquity price target lowered to $110 from $120 at KeyBanc

KeyBanc lowered the firm’s price target on HealthEquity (HQY) to $110 from $120 and keeps an Overweight rating on the shares. The firm is updating its model following Q4 results and outlook, reflecting ongoing costs around reimbursements and investments as part of the fraud challenges. While KeyBank took down its service gross margins to about 20% in Q1 and 24% in Q2 to reflect these elevated costs, the firm believes management could be overly cautious in its first half of the year margin outlook for two reasons, namely HealthEquity app downloads, and the fact that HealthEquity can collect some insurance claims on the reimbursements retroactively.