It’s no surprise that HealthEquity (HQY) has been crushed in the face of the COVID-19 market meltdown. COVID-19 caused the fastest and most aggressive selloff in history, with the indices falling ~35% over the course of 23 days. HQY has fallen from its 52-week highs of $89 to a low of $35 or 60% during this market meltdown.
Considering HealthEquity’s unique position as being distinctly disassociated from drug pricing issues, rising insurance costs, or the pharmaceutical supply chain, this selloff is an excellent opportunity for an entry point. As COVID-19 inevitably subsides, HealthEquity is in a strong position and being offered at a substantial discount. For long-term investors, HealthEquity presents a compelling picture of growth with a large addressable market moving forward and further strengthened with its acquisition of WageWorks.
COVID-19 Long-Term Catalyst
The COVID-19 pandemic will likely bring more attention to the Health Savings Account (HSA) space and may drive demand from more companies and consumers alike. The Health Savings account serves as a win-win for companies and consumers as this is an effective way to contain healthcare costs while allowing funds to accumulate for potential future medical expenses. This space has already been under a secular growth trend, and this pandemic may accelerate the growth of these accounts as awareness spreads.
Conversely, in the short-term, HSA funds may be depleted at a faster rate by account holders. Contributions may fall due to the spike in unemployment, and employer matching contributions may be in jeopardy as liquidity comes into question for many companies that have transitioned into survival mode post-COVID-19. However, over the long term, Continue reading "HealthEquity - COVID-19 Induced Selloff Buying Opportunity"