Afya price target raised to $19.50 from $17.50 at UBS on medical intake

UBS raised its price target on Afya Ltd . (NASDAQ:AFYA) to $19.50 from $17.50 on Thursday, while maintaining a Neutral rating on the Brazilian medical education company’s stock. According to InvestingPro data, Afya currently trades at a P/E ratio of 13.15x and has received upward earnings revisions from two analysts for the upcoming period.

The price target increase follows Afya’s first-quarter 2025 results, which showed medical school intake numbers exceeding expectations. The company’s impressive 15.7% revenue growth and 64.24% gross profit margins reflect this strong performance. UBS noted this stronger-than-anticipated enrollment could support growth momentum throughout 2025.

The research firm highlighted several positive factors in its analysis, including the potential for sustained higher margin levels due to the integration and higher occupancy at Unidom, along with the ongoing ramp-up of Mais Médicos campuses.

UBS also identified potential headwinds for Afya, specifically pointing to a higher percentage of students participating in the government’s FIES student loan program, which could impact tuition revenue. The firm additionally mentioned Brazil’s new tax regime with its 15% minimum tax rate as a "tail risk" for the company.

Despite the price target increase, UBS maintained its Neutral stance, noting that Afya shares currently trade at approximately 11 times price-to-earnings ratio, in line with historical averages, suggesting that potential upside from margin improvements might already be reflected in the stock price. However, InvestingPro analysis suggests the stock may be undervalued based on its Fair Value calculations and strong financial health score.

In other recent news, Afya Limited has reported significant financial growth in the fourth quarter of 2024. The company achieved a 14.9% increase in net revenue, reaching R$3.3 billion, and a 25% rise in adjusted EBITDA, totaling R$1.46 billion. Earnings per share also saw a substantial climb of 62.9% to R$0.071. These results highlight Afya’s strategic focus on expanding its educational offerings and operational efficiency. Additionally, Afya has filed its unaudited interim financial statements for the period ending March 31, 2025, with the SEC, maintaining transparency and regulatory compliance.

In terms of corporate governance, Afya announced a change in its independent registered public accounting firm, as disclosed in a recent SEC filing. The company did not specify the name of the new firm or the reasons for this change. Afya’s CEO, Virgilio Deloy Capobianco Gibbon, has signed off on these filings, ensuring adherence to the Securities Exchange Act of 1934. Furthermore, Afya has outlined its financial guidance for 2025, projecting net revenue between R$3.67 billion and R$3.77 billion, with adjusted EBITDA expected to range from R$1.62 billion to R$1.72 billion. These developments reflect Afya’s ongoing commitment to growth and financial health in the educational services sector.

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