HealthEquity (HQY) Moves to Buy: Rationale Behind the Upgrade

Core Viewpoint - HealthEquity (HQY) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive outlook based on rising earnings estimates, which are a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Performance - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements, making it a valuable tool for investors [2][4]. - For HealthEquity, the recent upgrade reflects an improvement in the company's underlying business, suggesting that investor sentiment may lead to increased stock prices [5]. Earnings Estimate Revisions - HealthEquity is expected to earn $3.89 per share for the fiscal year ending January 2026, which remains unchanged from the previous year, but the Zacks Consensus Estimate has increased by 1.6% over the past three months [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a proven track record of generating significant returns, particularly for Zacks Rank 1 stocks, which have averaged a +25% annual return since 1988 [7]. - HealthEquity's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating strong potential for market-beating returns in the near term [10].