HealthEquity’s 4Q Results Beat Analysts’ Expectations; Shares Slide

HealthEquity reported better-than-expected fiscal 4Q (ended Jan. 31) results. However, shares of the health savings account non-bank custodian declined 1.8% in Monday’s extended trading session after closing 1.3% higher on the day.

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HealthEquity’s (HQY) 4Q adjusted earnings of $0.42 per share rose 5% on a year-over-year basis and outpaced the Street estimates of $0.39 per share. Revenues decreased 6% to $188.2 million but topped analysts’ expectations of $185.36 million.

The company’s adjusted EBITDA came in at $56.6 million in the quarter, down 8% year-over-year. (See HealthEquity stock analysis on TipRanks)

HealthEquity CEO Jon Kessler said, “Fiscal 2022 is off to a fast start as well, with early client and partner wins as well as the acquisition of Luum, which will help our clients return to work.”

For the fiscal year 2022, the company anticipates total revenue of $750 million to $760 million. Adjusted EPS is forecasted to be in the range of $1.37 to $1.42. Additionally, adjusted EBITDA is expected to land between $240 million and $246 million.

On Feb. 9, Barrington analyst Alexander Paris increased the stock’s price target to $90 (12.2% upside potential) from $75 and reiterated a Buy rating.

Paris expects “HealthEquity’s operating and financial performance to improve as the economy gradually begins to reopen.”

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating. That’s based on 5 Buys versus 2 Holds. The average analyst price target of $89.20 implies 11.2% upside potential to current levels. Shares have increased 57% over the past six months.

HealthEquity scores a “Perfect 10” from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.