Afya stock price target raised to $25.50 from $25 at BofA Securities

Investing.com - BofA Securities raised its price target on Afya Ltd. (NASDAQ:AFYA) to $25.50 from $25.00 on Tuesday, while maintaining a Buy rating on the stock. The new target represents significant upside potential from the current price of $15.67, with InvestingPro data showing the stock trading at an attractive P/E ratio of 10.86x.

The firm cited the integration of FUNIC and the maturation of Mais Medicos campuses as key factors supporting higher EBITDA margins, though at a slower pace compared to the first half of 2025. The company currently maintains impressive gross profit margins of 64.56% and generates EBITDA of $250.46 million.

BofA Securities noted that FUNIC integration is expected to initially yield lower margins compared to Afya’s more mature assets, impacting overall profitability in the near term.

The firm also highlighted tax concerns, projecting Afya’s tax rate to reach 15% in 2026, up from a previously expected 6%, as the company continues to provision for OECD pillar two rules.

The price target adjustment incorporates Afya’s second-quarter 2025 results and reflects a slight change in weighted average cost of capital to 16.1% from 15.9% previously, due to a beta adjustment from 0.95 to 1.0. Based on InvestingPro’s comprehensive Fair Value analysis, the stock appears to be currently undervalued, presenting a potential opportunity for investors.

In other recent news, Afya Ltd . reported strong earnings for the second quarter of 2025, with earnings per share (EPS) significantly surpassing expectations at $2.27, compared to the forecasted $1.98. However, the company’s revenue fell slightly short of projections, recording $919.4 million against an anticipated $935.49 million. Despite the revenue miss, analysts have shown confidence in Afya’s performance. JPMorgan upgraded Afya’s stock rating from Neutral to Overweight, increasing its price target to $24.50, citing the company’s solid performance and alignment with its guidance. UBS also upgraded Afya from Neutral to Buy, although it slightly lowered its price target to $19.00. UBS noted strong operational momentum but expressed a conservative outlook on Afya’s M&A pipeline, expecting activity to resume by mid-2026. These upgrades reflect a positive sentiment among analysts regarding Afya’s recent developments.

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