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Why HealthEquity Stock Jumped 10% Today

By Brian Feroldi – Feb 19, 2020 at 4:59PM

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Shares rise after the company received some bullish praise from a Wall Street analyst.

What happened

Shares of HealthEquity (HQY -0.62%), a leading custodian of health savings accounts, rose more than 10% on Wednesday. The double-digit jump is traceable to an analyst upgrade. 

So what

Barrington Research published a note to its investors on Wednesday and reaffirmed its "buy" rating on HealthEquity's stock. Barrington also set a price target of $86, which is right in line with where shares are currently trading after today's double-digit jump.

Dollar bill with hole in middle that says HSA

Image source: Getty Images.

That bullish analyst call is likely linked to the release of HealthEquity's year-end fiscal 2020 sales results yesterday. As usual, the results were solid across the board:

  • Total HSA accounts grew 34% to 5.3 million.
  • Active HSA accounts grew 34% to 4.35 million.
  • Total accounts grew 180% to 12.8 million. The triple-digit growth is attributable to the acquisition of WageWorks.
  • Total HSA assets grew 43% to $11.5 billion.
  • Full-year 2019 revenue is expected to land between $530 million and $532 million. That's much higher than the $525.6 million that analysts were expecting. It's also above management's previously communicated guidance range.
  • Non-GAAP EPS is expected to land between $1.71 and $1.73. That's much higher than the consensus estimate on Wall Street of $1.51.

Given the strong numbers and bullish analyst call, it's easy to understand why shares shot up today.

Now what

CEO Jon Kessler stated that fiscal 2020 was another strong year for the business:

"Our newly expanded footprint began to drive year-end sales results, including a remarkable record setting 724,000 new HSA openings and 24 additional network partners in fiscal 2020. HSAs topped 5.3 million and Total Accounts reached 12.8 million. We enter fiscal 2021 with our largest balance of HSA assets ever, as they grew by $3.4 billion in fiscal 2020. We are well positioned to continue outpacing the market and providing remarkable purple service to our partners and members in fiscal 2021 and beyond."

This HealthEquity bull is thrilled to see that shares are currently trading near a 52-week high and are within spitting distance of eclipsing their 2018 peak.

With all of this company's numbers heading in the right direction, this Fool continues to believe that this is a great growth stock for investors to get to know.

Brian Feroldi owns shares of HealthEquity. The Motley Fool owns shares of and recommends HealthEquity. The Motley Fool has a disclosure policy.

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