HQY
HealthEquity, Inc.
$96.18
Platform & Compounding FCF
65%
Two-stage FCF DCF
Mild
·
Conviction
Overvalued
Trading 0.3% above fair value
You pay
$96.18
Bear
$70.04
Fair
$95.89
Bull
$120.99
Bear
$70.04
-27.2%
6% stage 1 growth, 11% discount
Fair
$95.89
-0.3%
10% stage 1 growth, 11% discount
Bull
$120.99
+25.8%
12% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (10% base case)
Terminal Value % of EV
39%
Implied Market Multiple
21.8x
Market is pricing in (growth)
10.1%
vs 9.6% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $107.43 from 27 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $95.89 per share.
Warnings
Stock-based employee pay equals 34% of profits. This dilutes existing shareholders, so cash flow alone overstates what owners really earn.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions