HealthEquity (HQY) Stock Forecast & Price Target

HealthEquity is benefiting from strong core execution, as F2Q:27 revenue rose 7.6% to $350.7M and adjusted EBITDA increased 11% to $167M, with EBITDA margin reaching about 48% and guidance nudged higher for F2027E. Its HSA franchise is still taking share, with HSA members up 8% year over year, new HSA sales up 24%, custodial assets up 14%, and renewals tracking above 90%, while elevated HSA cash balances and higher repricing rates support recurring custodial revenue growth. The outlook is further strengthened by a widening addressable market from rising high-deductible plan adoption and favorable HSA legislation, plus technology and AI investments that are expanding engagement, lowering service costs, and supporting margin expansion.

HealthEquity is facing a negative setup because its earnings are highly exposed to HSA cash balances and investment returns, which could weaken if steep interest rate cuts arrive before Enhanced Rates are fully locked in. The outlook also assumes a recession and a weakening labor market, with unemployment above 5% potentially slowing HSA balance growth, contributions, and fee-generating activity, while a 13x FY2027 EBITDA multiple implies only 5% topline growth and 200bps of margin contraction in 2027. In addition, mounting competition, alternative payment adoption, regulatory risk, and a material cybersecurity/fraud overhang — including a class action lawsuit and millions in costs from a recent attack — threaten both profitability and investor confidence.