RBC Capital Markets Upgrades HealthEquity, Inc. (NASDAQ:HQY) Stock Outlook with $100 Price Target and Outperform Rating
RBC Capital Markets has revised its outlook on HealthEquity, Inc (NASDAQ:HQY) stock, a leading health savings account provider, by increasing its price target to $100 from $92, while maintaining an Outperform rating. The firm is optimistic about three core elements that are expected to drive earnings growth significantly in the coming years.
The factors contributing to RBC Capital's positive stance include HealthEquity's HSA growth, custodial cash yields, and service costs, which are projected to result in an EPS CAGR exceeding 25% through 2027. Despite concerns about interest rate exposure and potential Fed rate cuts, RBC Capital's Custodial Cash Yield model suggests a strong EPS CAGR of over 20% remains feasible.
Recent financial results show a 23% revenue increase and a 46% rise in adjusted EBITDA for HealthEquity in Q2 2025. The company also completed the BenefitWallet acquisition and introduced new initiatives like HPAs and a $300 million share repurchase program. With a positive outlook for fiscal 2025, HealthEquity remains committed to growth and innovation.
InvestingPro Insights reveal a high market capitalization of $6.77 billion for HealthEquity, with a P/E ratio of 65.07. The company's robust revenue growth and net income projections align with RBC Capital's positive earnings outlook. While analysts have revised earnings expectations downwards, investors should monitor future reports closely.
Overall, HealthEquity's strong financial position, growth initiatives, and market valuation make it an attractive investment opportunity. With RBC Capital's updated analysis and price target, investors can make informed decisions about HealthEquity's potential for future growth and profitability.