Last week, HealthEquity, Inc. (NASDAQ:HQY) reported fourth-quarter adjusted EPS of 69 cents, up from 63 cents a year ago, missing the consensus of 72 cents.

Revenue increased 19% year over year to $311.8 million, beating the consensus of $306.05 million.

The health savings account (HSA) custodian reported adjusted EBITDA of $107.8 million, an increase of 9%.

Also Read: HealthEquity's Long-Term Growth Intact Despite Short-Term Margin Pressures, Analyst Says

In a note on Tuesday, analyst Gregory Peters writes that all financial institutions are dealing with elevated levels of fraud.

HealthEquity stock's recent year-to-date underperformance is partly due to its disclosure of fraud against some of its HSA customers and near-term investor concerns about recent management changes. The stock is inexpensive, and the analyst expects management to utilize the share repurchase program to capitalize on the weakness.

Despite reducing estimates for increased fraud-related costs, Raymond James upgraded HealthEquity to Strong Buy from Outperform.

The analyst lowered the price target from $120 to $115.

"Longer term, we have a favorable outlook on the growing HSA market, HQY's ability to gain market share, and HSA cash repricing at higher yields, which should lead to margin expansion and double-digit EPS growth over each of the next two years," Raymond James analyst says.

The analyst writes that the stock has been outperforming peers and the market on a YTD basis due in part to some investors' flight to quality, the growing expectation for federal legislative improvements in the functionality of HSAs, and a reasonably stable interest rate outlook.

Price Action: HQY stock is up 0.75% at $91 at the last check Tuesday.

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