After another successful quarter in Q1 FY26, I continue to rate HealthEquity, Inc. (NASDAQ: HQY ) buy for long-term oriented investors seeking exposure to idiosyncratic drivers of economic value in their core equity allocations.Equity strategist (US Equities)Technical focus on fundamental value drivers of business economics to uncover high probability long-term compounders. Seeking to buy at appropriate prices relative to intrinsic worth. Partners are represented over the cross-section of financial markets, ...

Core Insights - HealthEquity's HSAnswers has won multiple prestigious awards for its innovative approach to healthcare benefits education, utilizing AI technology to enhance accessibility and reliability for users [1][3]. Group 1: Product Overview - HSAnswers is an AI-powered tool designed to provide quick and reliable answers to questions regarding Health Savings Accounts (HSAs) and other consumer-directed benefits (CDBs) [2]. - The tool has facilitated hundreds of thousands of conversations since its launch in October 2024, addressing both simple and complex inquiries related to healthcare benefits [4]. Group 2: Industry Recognition - HSAnswers has received notable accolades, including the 2025 AI Breakthrough Awards for Informational Bot Solution of the Year and two Globee Silver Awards for AI achievements in healthcare [3]. Group 3: Market Demand and Impact - A significant 73% of employees express a need for improved benefits education, highlighting the tool's relevance in addressing real-world consumer questions [4]. - The tool leverages over 500 curated educational resources and 20 years of industry expertise, ensuring users receive reliable and contextually relevant information [6]. Group 4: Accessibility and Future Development - HSAnswers is freely available to a wide audience, including current and prospective HealthEquity members, benefits administrators, and health plan partners [7]. - The company plans to continue investing in HSAnswers, aiming to incorporate more sophisticated use cases to enhance user experience in the future [6].

Core Insights - HealthEquity (HQY) is expected to report quarterly earnings of $0.92 per share, reflecting a year-over-year increase of 7% [1] - Revenue is anticipated to reach $318.81 million, which is a 6.3% increase from the same quarter last year [1] - The consensus EPS estimate has remained unchanged over the last 30 days, indicating a reevaluation of initial estimates by analysts [1] Revenue Estimates - 'Revenue- Service' is projected to be $116.04 million, indicating a year-over-year decrease of 0.6% [4] - 'Revenue- Custodial' is expected to be $155.15 million, reflecting an increase of 11.9% year over year [4] - 'Revenue- Interchange' is estimated to reach $46.74 million, showing a 5% increase from the prior-year quarter [4] HSA Metrics - 'Total HSA Assets' are likely to reach $32.48 billion, up from $29.47 billion in the same quarter last year [5] - 'Total HSA investments' are estimated at $14.78 billion, compared to $13.10 billion a year ago [5] - 'CDBs Accounts' are projected to be 6.88 million, slightly down from 6.90 million in the previous year [6] Account Projections - 'Total Accounts' are expected to reach 16.97 million, an increase from 16.28 million year over year [6] - 'Total HSA cash' is projected to be $17.70 billion, up from $16.37 billion in the same quarter last year [6] - 'HSAs Accounts' are estimated at 10.10 million, compared to 9.38 million a year ago [7] Stock Performance - Over the past month, shares of HealthEquity have returned -6.7%, while the Zacks S&P 500 composite has increased by 1.3% [7] - Currently, HQY holds a Zacks Rank 3 (Hold), suggesting its performance may align with the overall market in the near future [7]

Core Insights - HealthEquity, Inc. (HQY) is experiencing growth driven by its business model and strategy, particularly in Health Savings Accounts (HSAs), despite facing data security threats [1][8] - The company's shares have declined 7% year-to-date, underperforming the industry and contrasting with a 9.5% increase in the S&P 500 [1] Company Performance - HealthEquity has a market capitalization of $8.04 billion and projects a 20.8% growth over the next five years [2] - The company has surpassed earnings estimates in three of the last four quarters, with an average surprise of 12.41% [2] HSA Growth - As of April 30, 2025, HealthEquity managed 9.9 million HSAs, a 9% increase year-over-year, with 770,000 HSAs having investments, up 16% [3] - Total HSA assets reached $31.3 billion, reflecting a 15% year-over-year increase, including $17.1 billion in HSA cash (up 7.5%) and $14.2 billion in HSA investments (up 24.6%) [4] Technological Advancements - The company's focus on AI and mobile-first strategies is enhancing efficiency and engagement, with over 1.2 million app downloads and a shift to secure app-based access [5] - AI-driven systems are improving claims processing and reducing call volumes, contributing to member satisfaction and operational efficiency [5] Recent Financial Results - HealthEquity reported strong first-quarter fiscal 2026 results, with significant growth in both top and bottom lines, and a reduction in fraud-related costs from $11 million to $3 million [6][7] - The company added 150,000 new HSA accounts in the first quarter, contributing to the overall growth in total HSA assets [6] Estimate Trends - There has been a positive revision trend for fiscal 2026 earnings estimates, with the Zacks Consensus Estimate for EPS increasing by 3 cents to $3.73 [9] - The consensus estimate for second-quarter fiscal 2026 revenues is $318.8 million, indicating a 6.3% rise year-over-year, while EPS is expected to improve by 6.9% [9]

Core Insights - HealthEquity Community Foundation announced a total of $50,000 in funding awarded to 20 nonprofit organizations in the summer 2025 grant cycle, supporting various operational activities including food, clothing, and medical care [1] - The foundation has increased funding across its core focus areas, with a notable 50% increase in support for mental health initiatives since the first funding round [3] - The foundation will welcome a new president, Stephanie Larsen, later this year, who has over a decade of experience at HealthEquity and a strong public health background [4] Funding and Support - The funding will assist vulnerable populations by providing free dental, vision, and medical care, addressing immense demand for these services [2] - The next grant cycle is currently open for eligible 501(c)(3) organizations to apply until September 30, 2025 [5] - The foundation plans to provide additional funding rounds twice each year, emphasizing its commitment to community wellness [6] Organizational Overview - HealthEquity administers HSAs and various consumer-directed benefits for over 17 million accounts, partnering with employers and benefits advisors to enhance healthcare consumer empowerment [7]

Core Insights - The HealthEquity Community Foundation has awarded a total of $50,000 in grants to 20 nonprofit organizations focused on physical and mental health, financial literacy, and basic needs [1][3] - The foundation has seen a 50% increase in funding for mental health initiatives since its first round of funding, reflecting its commitment to holistic community wellness [3] - A new leader, Stephanie Larsen, will take over as president later this year, succeeding Dale Miller, who has been instrumental in launching the foundation [4][5] Funding and Support - The funding will support various operational activities, including providing food, clothing, and expert medical care to vulnerable populations [1][2] - The next grant cycle is open for applications until September 30, 2025, encouraging eligible 501(c)(3) organizations to apply [5] Organizational Impact - The foundation aims to connect health and financial well-being, particularly among underserved groups, as it continues to grow and innovate [5] - HealthEquity administers HSAs and other consumer-directed benefits for over 17 million accounts, partnering with employers and benefits advisors to improve health outcomes [7][8]

Core Insights - Organon (OGN) is currently more attractive to value investors compared to HealthEquity (HQY) based on various financial metrics and Zacks Rank [3][7]. Valuation Metrics - OGN has a forward P/E ratio of 2.38, significantly lower than HQY's forward P/E of 24.60 [5]. - The PEG ratio for OGN is 0.90, while HQY's PEG ratio stands at 1.18, indicating OGN's better valuation relative to its expected earnings growth [5]. - OGN's P/B ratio is 3.23, compared to HQY's P/B ratio of 3.74, further supporting OGN's more favorable valuation [6]. Zacks Rank and Style Scores - OGN holds a Zacks Rank of 2 (Buy), indicating a stronger earnings outlook, while HQY has a Zacks Rank of 3 (Hold) [3]. - OGN has a Value grade of A, whereas HQY has a Value grade of C, reflecting OGN's superior valuation metrics [6].

Core Viewpoint - HealthEquity, Inc. plans to release its second quarter fiscal 2026 financial results on September 2, 2025, followed by a conference call for investors to discuss the results [1] Financial Results Announcement - The financial results will be released after the close of regular stock market trading hours on September 2, 2025 [1] - A conference call will be held at 4:30 p.m. Eastern Time on the same day to review the financial results [2] Upcoming Investor Conferences - HealthEquity management will present and meet with investors at several upcoming conferences: - Wells Fargo 2025 Healthcare Conference on September 3, 2025, at 8:00 a.m. Eastern Time [3] - Jefferies 2025 Fintech Conference on September 4, 2025, at 10:40 a.m. Eastern Time [4] - Morgan Stanley 23 Annual Global Healthcare Conference on September 8, 2025, at 10:45 a.m. Eastern Time [5] - Baird 2025 Global Healthcare Conference on September 9, 2025, at 2:00 p.m. Eastern Time [6] - Deutsche Bank's 2025 Healthcare Summit on September 10, 2025, with one-on-one meetings scheduled [7][8] Company Overview - HealthEquity administers health savings accounts (HSAs) and other consumer-directed benefits for over 17 million accounts [8] - The company collaborates with employers, benefits advisors, and health and retirement plan providers to empower healthcare consumers [8]

Core Insights - Zacks Premium offers tools for investors to enhance their stock market engagement and confidence through various resources like daily updates, research reports, and stock screens [1] Zacks Style Scores - Zacks Style Scores are indicators designed to help investors select stocks likely to outperform the market within 30 days, rated from A to F based on value, growth, and momentum [2] - The Value Score focuses on identifying undervalued stocks using financial ratios such as P/E, PEG, and Price/Sales [3] - The Growth Score assesses a company's financial health and future potential through projected earnings and sales growth [4] - The Momentum Score identifies optimal times to invest based on price trends and earnings estimate changes [5] - The VGM Score combines the three Style Scores to highlight stocks with attractive value, growth potential, and positive momentum [6] Zacks Rank - The Zacks Rank is a proprietary model that utilizes earnings estimate revisions to guide investors, with 1 (Strong Buy) stocks achieving an average annual return of +23.62% since 1988, significantly outperforming the S&P 500 [7] - There are typically over 800 stocks rated 1 or 2, making it essential for investors to use Style Scores to narrow down their choices [8] - To maximize returns, investors should target stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B [9] - Stocks with lower ranks, even with good Style Scores, may still face downward price pressure due to negative earnings outlooks [10] Company Spotlight: HealthEquity (HQY) - HealthEquity, based in Draper, UT, provides integrated healthcare account management solutions and is rated 2 (Buy) with a VGM Score of B [11] - The company is positioned well for growth, with a Growth Style Score of B and a projected year-over-year earnings growth of 19.6% for the current fiscal year [12] - Recent analyst revisions have increased the earnings estimate for fiscal 2026 by $0.11 to $3.73 per share, alongside an average earnings surprise of +12.4% [12]

Core Viewpoint - HealthEquity (HQY) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in earnings estimates, which have a strong correlation with near-term stock price movements [4][6]. - Rising earnings estimates for HealthEquity suggest an improvement in the company's underlying business, likely leading to increased stock prices [5][10]. Zacks Rating System - The Zacks Rank stock-rating system classifies stocks into five groups based on earnings estimates, with a proven track record of performance, particularly for Zacks Rank 1 stocks, which have generated an average annual return of +25% since 1988 [7][9]. - Only the top 20% of Zacks-covered stocks receive a "Strong Buy" or "Buy" rating, indicating superior earnings estimate revisions [10]. HealthEquity's Earnings Estimates - HealthEquity is expected to earn $3.73 per share for the fiscal year ending January 2026, with no year-over-year change [8]. - Over the past three months, the Zacks Consensus Estimate for HealthEquity has increased by 8.8%, reflecting analysts' positive revisions [8].