HealthEquity, Inc. Just Recorded A 22% EPS Beat: Here's What Analysts Are Forecasting Next

The quarterly results for HealthEquity, Inc. (NASDAQ:HQY) were released last week, making it a good time to revisit its performance. Revenues were US$355m, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$0.82, an impressive 22% ahead of estimates. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on HealthEquity after the latest results.

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Taking into account the latest results, the most recent consensus for HealthEquity from 15 analysts is for revenues of US$1.41b in 2027. If met, it would imply a reasonable 5.8% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to accumulate 6.0% to US$2.93. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.41b and earnings per share (EPS) of US$2.84 in 2027. So the consensus seems to have become somewhat more optimistic on HealthEquity's earnings potential following these results.

Check out our latest analysis for HealthEquity

The consensus price target was unchanged at US$115, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on HealthEquity, with the most bullish analyst valuing it at US$135 and the most bearish at US$88.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await HealthEquity shareholders.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the HealthEquity's past performance and to peers in the same industry. It's pretty clear that there is an expectation that HealthEquity's revenue growth will slow down substantially, with revenues to the end of 2027 expected to display 7.8% growth on an annualised basis. This is compared to a historical growth rate of 14% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 4.8% per year. So it's pretty clear that, while HealthEquity's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

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The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around HealthEquity's earnings potential next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on HealthEquity. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple HealthEquity analysts - going out to 2029, and you can see them free on our platform here.

You can also view our analysis of HealthEquity's balance sheet, and whether we think HealthEquity is carrying too much debt, for free on our platform here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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