| Ticker | Company | ~May 2025 | ~May 2026 | 1Y Return | Market Cap | Consensus | HF Score |
|---|---|---|---|---|---|---|---|
| HQY ★ | HealthEquity | ~$86 | ~$76 | -12.5% | $7.6B | Strong Buy | 0.13 |
| DOCS | Doximity | ~$37 | ~$42 | ~+14% | $6.5B | Strong Buy | 0.28 |
| OMCL | Omnicell | ~$30 | ~$32 | ~+7% | $1.3B | Hold | 0.18 |
| BTSG | BrightSpring Health | ~$12 | ~$13 | ~+8% | $2B | Buy | 0.12 |
★ HQY is the only stock in this 10-stock cohort with a negative 1-year return (-12.5%), underperforming the broader market and healthcare sector. This creates the setup for a potential mean-reversion opportunity — analysts universally bullish (10B/0H/1S) with 60% price target upside, while the stock has declined. The underperformance reflects interest rate sensitivity (HSA custodial yields hurt by rate cuts) and competitive concerns.
| Firm | Rating | Price Target |
|---|---|---|
| Raymond James | Strong Buy | $140 |
| Citi | Buy | $130 |
| Piper Sandler | Buy | $125 |
| BofA | Strong Buy | $145 |
| Wells Fargo | Buy | $110 |
| Morgan Stanley | Buy | $120 |
| JP Morgan | Buy | $115 |
| Baird | Buy | $118 |
| Needham | Buy | $105 |
| Mizuho | Sell | $55 |
| Fiscal Year | Revenue | YoY Growth | Net Income | Net Margin | Free Cash Flow | HSA Members (M) |
|---|---|---|---|---|---|---|
| FY2017 (Jan'17) | $178M | — | $26M | 14.8% | $33M | 2.1M |
| FY2018 | $231M | +30% | $26M | 11.3% | $53M | 3.0M |
| FY2019 | $313M | +35% | $44M | 14.1% | $82M | 3.8M |
| FY2020 | $398M | +27% | $49M | 12.3% | $100M | 4.4M |
| FY2021 | $542M | +36% | $69M | 12.7% | $150M | 5.8M |
| FY2022 | $620M | +14% | $30M | 4.8% | $103M | 6.5M |
| FY2023 | $750M | +21% | $37M | 4.9% | $152M | 7.7M |
| FY2024 | $1.04B | +39% | $161M | 15.5% | $330M | 9.1M |
| FY2025 | $1.19B | +14% | $167M | 14.0% | $408M | 9.8M |
| FY2026 (Jan'26) | $1.31B | +10.1% | $215M | 16.4% | $455M | 10.5M |
HQY grew revenue 7.4× over 9 years ($178M → $1.31B) while net margin expanded from 14.8% to 16.4%, with a step-up driven by the high-rate environment in FY2024 (custodial revenue on $25B+ in HSA assets). FCF grew from $33M to $455M — a 13.8× increase. The company is getting steadily more profitable on both top and bottom line. The key driver: each new HSA member adds recurring custodial revenue from interest on cash balances (75%+ gross margin), administrative fees, and investment management fees. The business has significant operating leverage as the HSA asset base compounds annually. The -12.5% 1-year stock performance reflects market concern about lower interest rates (Fed cuts reduce custodial income), but the underlying member and asset growth story remains intact.
| Company | P/E (TTM) | EV/EBITDA | EV/Revenue | P/FCF | Rev Growth | Net Margin |
|---|---|---|---|---|---|---|
| HQY ★ | 32.2× | ~18× | ~6× | ~17× | +10.1% | 16.4% |
| DOCS (Doximity) | ~40× | ~30× | ~13× | ~45× | +22% | 31% |
| Benefytt / WEX | ~18× | ~10× | ~3× | ~15× | +8% | 10% |
| Healthcare IT Median | ~28× | ~18× | ~6× | ~25× | — | ~12% |
HQY trades at a reasonable valuation on P/FCF (17×) — cheapest in this 10-stock cohort on this metric. The 32× P/E and 59% analyst PT upside suggests the market is discounting the rate sensitivity story more than the long-term HSA member compounding story.
| Revenue Driver | FY2026 Est. | % of Revenue | Growth | Notes |
|---|---|---|---|---|
| Custodial Revenue | ~$600M | 46% | +12% | Interest earned on $25B+ HSA cash balances; rate-sensitive; high 75%+ gross margins |
| Service Revenue | ~$550M | 42% | +9% | Per-member admin fees, commuter benefits, COBRA, FSA, HRA services |
| Interchange Revenue | ~$155M | 12% | +6% | Debit card transactions on HSA debit cards; grows with member spending |
| Total | $1.31B | 100% | +10.1% | 10.5M HSA members; $25B+ in HSA assets under management |
The HSA flywheel: members join → HQY earns admin fees + custodial interest → members invest HSA assets → HQY earns investment fees. Total HSA assets under management grow both through new member additions AND market appreciation. HQY is the #1 HSA custodian in the US by member count (10.5M) and #2 by assets.
9 of 12 MAs bullish. RSI 58.1 — neutral to slightly bullish. Mixed oscillator signals typical of a stock recovering from a decline. Technical setup supports gradual recovery thesis.
| Category | Assessment | Score | Notes |
|---|---|---|---|
| Business Quality | Very Good | 8/10 | Market-leading HSA custodian; network effects; high switching costs |
| Revenue Growth | Good | 7/10 | $1.31B FY2026 (+10%); structural HSA market growth 8–12%/year |
| Profitability Trend | Excellent | 8/10 | Net margin 16.4%; FCF grew 13.8× over 9 years — best-in-class compounding |
| Valuation | Attractive | 8/10 | 17× P/FCF — cheapest in cohort on this metric; significant PT upside |
| Analyst Sentiment | Strong Buy | 9/10 | 10B/0H/1S; avg PT $121.50 (+60% upside) — unanimous conviction |
| Hedge Fund Activity | Low | 4/10 | HF Score 0.13 — limited institutional 13F presence |
| Technical Setup | Buy | 7/10 | RSI 58.1; 9/12 MAs bullish; recovering from decline |
| Key Risk | Rate Sensitivity | — | Fed rate cuts reduce $600M custodial revenue; Fidelity competition in employer channel |
| OVERALL RATING | STRONG BUY (Contrarian) | 7.6/10 | Highest fundamental/valuation conviction in the cohort despite worst stock performance; compelling mean-reversion setup |