HealthEquity, Inc. HQY witnessed strong momentum in the past year. Shares of the company rallied 46.8% against the 13.4% decline of the industry. The S&P 500 Composite has risen 27.3% during the same time frame.

With healthy fundamentals and strong growth opportunities, this Zacks Rank #3 (Hold) company appears to be a solid wealth creator for its investors at the moment.

Draper, UT-headquartered HealthEquity provides integrated solutions for healthcare account management, health reimbursement arrangements and flexible spending accounts for health plans, insurance companies and third-party administrators in the United States. HealthEquity uses its innovative technology to manage consumers' tax-advantaged Heath Saving Accounts (HSAs) and other consumer-directed benefits (CDBs) offered by employers, including flexible spending accounts and health reimbursement arrangements (FSAs and HRAs).

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Factors Favoring HQY’s Growth

The rally in the company’s share price can be attributed to the sustained strength of its HSAs management business. The optimism led by a solid third-quarter fiscal 2025 performance and robust business potential are expected to contribute further. However, stiff competition is a cause for concern.

HealthEquity exited fiscal third-quarter 2025 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 fiscal third quarter is promising. The expansion of gross margin also bodes well. HQY also increased its revenue and earnings projections for fiscal 2025, which are also likely to have interested investors.

For fiscal 2025, revenues are now projected to be between $1,185 million and $1,195 million, up from the previous range of $1,165 million-$1,185 million. Adjusted earnings per share (EPS) is now expected to be in the range of $3.08-$3.16, up from the earlier guidance of $2.98-$3.14.

During the third quarter of fiscal 2025, despite inflationary challenges, HealthEquity has experienced solid growth in HSA balances, driven by a significant increase in invested assets, which now represent a larger portion of total HSA assets. The growing number of members choosing to invest in HSAs reflects a positive trend. Additionally, more members are selecting enhanced rates on HSA cash, leading to improved and more consistent custodial yields. These are likely to have favored the stock’s growth.

Factors That May Offset the Gains for HQY

HealthEquity faces stiff competition in the rapidly evolving and fragmented medical services market. The company’s success depends to a substantial extent on consumers' willingness to increase their use of HSAs and other CDBs and its ability to increase engagement and demonstrate the value of its services to existing and potential clients, Network Partners and members.  

If HealthEquity’s existing clients, Network Partners and members do not recognize or acknowledge the benefits of its services or the company does not drive engagement, then the market for its services might develop slower than expected, which could affect its operating results.

A Look at Estimates

HQY’s EPS for fiscal 2025 and 2026 is projected to grow 39.1% and 17.7%, respectively, to $3.13 and $3.68 on a year-over-year basis.  The Zacks Consensus Estimate for EPS has increased 2 cents and decreased 5 cents for 2025 and 2026, respectively, in the past 30 days.

Revenues for fiscal 2025 and 2026 are anticipated to rise 18.9% and 8.6%, respectively, to $1.19 billion and $1.29 billion on a year-over-year basis.

Stocks to Consider

Some better-ranked stocks in the broader medical space are Masimo MASI, Accuray ARAY and Abbott Laboratories ABT.

Masimo, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 11.8% for 2025. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

MASI’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 17.10%. Its shares have risen 31.7% against the industry’s 1% decline in the past six months.

Accuray, carrying a Zacks Rank #2 at present, has an estimated growth rate of 1200% for 2025. Its earnings missed estimates in three of the trailing four quarters and met in one, delivering an average negative surprise of 141.97%.

ARAY’s shares have gained 8.8% against the industry’s 1% decline in the past six months.

Abbott, carrying a Zacks Rank of 2 at present, has an estimated earnings growth rate of 10% for 2025. It delivered a trailing four-quarter average earnings surprise of 1.64%.

ABT’s shares have risen 8.5% in the past six months compared with the industry’s 7.2% growth.

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