Reasons to Hold HealthEquity Stock in Your Portfolio for Now

HealthEquity, Inc. HQY has been gaining from its business model and strategy. The optimism, led by a solid third-quarter fiscal 2025 performance and strength in Health Savings Accounts (HSAs), is expected to contribute further. However, data security threats are major concerns.

In the past six months, the Zacks Rank #3 (Hold) company’s shares have declined 11.8% against the 6.2% growth of the industry. The S&P 500 has increased 14.1% during the said time frame.

The renowned provider of technology-enabled services platforms for healthcare savings and spending decisions has a market capitalization of $7.93 billion. The company projects 21% growth over the next five years and expects to witness continued improvements in its business. HealthEquity’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed once, the average surprise being 11.6%.

Reasons Favoring HQY’s Growth

AI & Digital Innovation Drive Scalable Efficiency: During the fiscal third quarter, HealthEquity continued to leverage AI and digital innovation to drive scalable efficiency, with management highlighting tangible benefits across member services and operations. AI-powered tools such as expedited claims processing, intelligent self-service and agentic voice automation are reducing call volumes and service costs while improving resolution times, contributing to margin expansion in the quarter.

In parallel, the company’s app-first strategy and mandatory passkey authentication are shifting members to lower-cost digital channels and eliminating high-frequency service drivers like password resets. While still in the early stages, management views these initiatives as a multi-year opportunity to support operating leverage and allow HealthEquity to scale its growing account base without a proportional increase in costs.

Expansion of Health Savings Accounts: HealthEquity has experienced significant growth in its HSA offerings. As of Oct. 31, 2025, the total number of Health Savings Accounts (HSAs) for which HealthEquity served as a non-bank custodian was 10.1 million, up 6% year over year.

HealthEquity reported 802,000 HSAs with investments as of Oct. 31, 2025, up 10% year over year. Total accounts, as of Oct. 31, 2025, were 17.3 million. This uptick included total HSAs and 7.2 million CDBs. Total HSA assets were $34.4 billion at the end of Oct. 31, 2025, up 15% year over year. This included $16.9 billion of HSA cash and $17.5 billion of HSA investments. Deposits held on behalf of HealthEquity’s clients to facilitate the administration of its CDBs, from which the company generates custodial revenues, were $0.8 billion as of Oct. 31, 2025.

Strong Q3 Results: HealthEquity exited third-quarter fiscal 2026 with better-than-expected results. The company witnessed solid top-line and bottom-line performances in the reported quarter. Solid growth in HSAs also drove the top line. The solid uptick in total HSA assets in the reported quarter is promising. Significant improvements in operating and gross margins also bode well.

A Factor That May Offset HQY’s Gains

Data Security Threats: HealthEquity manages highly sensitive personal data and more than $34 billion of client HSA assets, making platform security a persistent operational risk. While fraud reimbursements declined to approximately $0.3 million in the fiscal third quarter of 2026, management continues to invest heavily in fraud prevention and security controls, underscoring that the threat remains structural rather than eliminated. Any material security breach could result in the loss of funds or sensitive data, litigation, regulatory scrutiny and reputational damage, potentially disrupting operations, pressuring margins and eroding client and member confidence.

Estimate Trend

HealthEquity has been witnessing a positive estimate revision trend for fiscal 2026. Over the past 30 days, the Zacks Consensus Estimate for earnings per share (EPS) has moved 8 cents upward to $3.94.

The Zacks Consensus Estimate for fourth-quarter fiscal 2026 revenues is pegged at $332.9 million, implying a 6.7% rise from the year-ago reported number. The consensus mark for fiscal fourth-quarter EPS is pinned at 89 cents, implying a 28.9% improvement year over year.

Key Picks

Some better-ranked stocks from the broader medical space are Intuitive Surgical ISRG, Medpace Holdings MEDP and Boston Scientific BSX.

Intuitive Surgical, sporting a Zacks Rank #1 (Strong Buy) at present, posted a third-quarter 2025 adjusted EPS of $2.40, beating the Zacks Consensus Estimate by 20.6%. Revenues of $2.51 billion topped the Zacks Consensus Estimate by 3.9%. You can see the complete list of today’s Zacks #1 Rank stocks here.

ISRG has an estimated long-term earnings growth rate of 15.7% compared with the industry’s 11.9% growth. The company’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 16.34%.

Medpace, currently carrying a Zacks Rank #2 (Buy), reported a third-quarter 2025 EPS of $3.86, which surpassed the Zacks Consensus Estimate by 10.29%. Revenues of $659.9 million beat the Zacks Consensus Estimate by 3.04%.

MEDP has an estimated earnings growth rate of 17.1% for 2025 compared with the industry’s 16.6% growth. The company’s earnings beat estimates in each of the trailing four quarters, the average surprise being 14.28%.

Boston Scientific, currently carrying a Zacks Rank #2, reported a third-quarter 2025 adjusted EPS of 75 cents, which surpassed the Zacks Consensus Estimate by 5.6%. Revenues of $5.07 billion topped the Zacks Consensus Estimate by 1.9%.

BSX has an estimated long-term earnings growth rate of 16.4% compared with the industry’s 13.5% growth. The company’s earnings beat estimates in each of the trailing four quarters, the average surprise being 7.36%. 

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This article originally published on Zacks Investment Research (zacks.com).

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