HealthEquity, Inc. HQY witnessed strong momentum in the year-to-date period. Shares of the company rallied 54.6% against the 9.8% decline of the industry. The S&P 500 Composite has risen 24% during the same time frame.

With healthy fundamentals and strong growth opportunities, this Zacks Rank #2 (Buy) 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 second-quarter fiscal 2025 performance and robust business potential are expected to contribute further. However, stiff competition is a cause for concern.

HealthEquity exited second-quarter with solid top-line and bottom-line performances. Solid growth in HSAs drove the top line. The solid uptick in total HSA assets in the reported quarter was promising. The expansion of both margins looks promising. HQY also upped 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 $1.17 billion and $1.19 billion, up from the previous outlook of $1.16 billion to $1.18 billion. Adjusted earnings per share (EPS) are now expected to be in the range of $2.98-$3.14, up from the earlier guidance of $2.93-$3.10.

During the second 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.

Factor 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 37.3% and 20.8%, respectively, to $3.09 and $3.73 on a year-over-year basis.  The Zacks Consensus Estimate for earnings has remained stable for 2025 and 2026 in the past 30 days.

Revenues for fiscal 2025 and 2026 are anticipated to rise 18.2% and 11.8%, respectively, to $1.18 billion and $1.32 billion on a year-over-year basis.

Other Stocks to Consider

Some other top-ranked stocks from the medical industry are Masimo MASI, AngioDynamics ANGO and Globus Medical GMED.

Masimo, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated growth rate of 10.4% for 2025. You can see the complete list of today’s Zacks #1 Rank stocks here.

MASI’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 17.10%. Masimo’s shares have risen 37.2% year to date compared with the industry’s 6.7% growth.

AngioDynamics, carrying a Zacks Rank #2 at present, has an estimated growth rate of 38.2% for 2025. ANGO’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 31.71%.

AngioDynamics’ shares have lost 8.9% year to date against the industry’s 6.7% growth.

Globus Medical, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 12.7%. GMED’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 12.1%. Its shares have risen 56.5% year to date compared with the industry’s 6.7% growth.

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