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Citi’s analysts also noted that the controller’s stock buyback program is nearing its end, with approximately $20 million remaining, equivalent to about 11 days of trading volume. This factor, combined with the anticipated rise in the cost of funding following the expiration of Softbank (OTC:SFTBY)’s credit line in April 2026, which has a fixed rate of 6.5%, and the potential impact of foreign exchange depreciation, underpins their cautious stance on Afya. However, the company maintains a strong free cash flow yield of 13% and operates with a moderate debt level, according to InvestingPro data. However, the company maintains a strong free cash flow yield of 13% and operates with a moderate debt level, according to InvestingPro data.
Citi’s analysts also noted that the controller’s stock buyback program is nearing its end, with approximately $20 million remaining, equivalent to about 11 days of trading volume. This factor, combined with the anticipated rise in the cost of funding following the expiration of Softbank’s credit line in April 2026, which has a fixed rate of 6.5%, and the potential impact of foreign exchange depreciation, underpins their cautious stance on Afya. However, the company maintains a strong free cash flow yield of 13% and operates with a moderate debt level, according to InvestingPro data.
Citi’s analysts also noted that the controller’s stock buyback program is nearing its end, with approximately $20 million remaining, equivalent to about 11 days of trading volume. This factor, combined with the anticipated rise in the cost of funding following the expiration of Softbank’s credit line in April 2026, which has a fixed rate of 6.5%, and the potential impact of foreign exchange depreciation, underpins their cautious stance on Afya.
The firm’s analysis suggests that these factors, especially the forthcoming financial changes and market saturation concerns, could negatively affect Afya’s stock performance in the future. The sell rating and reduced price target are indicative of Citi’s conservative outlook on the company’s financial prospects.
In other recent news, Afya Ltd (NASDAQ:AFYA), a leading medical education group in Brazil, has announced a significant acquisition of Faculdade Única de Contagem, marking a notable expansion in the educational services sector. The financial details of the acquisition were not disclosed, but the move is expected to enhance Afya’s educational offerings and support its long-term growth objectives.
In addition to the acquisition, Afya Ltd also reported its Q3 2024 financial results, although specific details regarding its financial performance were not provided. Notably, the company had previously reported a 14% rise in net revenue and significant increases in adjusted net income and EBITDA for Q2 2024. The full-year net revenue is projected to be between R$3.225 billion and R$3.325 billion.
In terms of financial support, Afya Ltd secured a loan of approximately $95 million from the International Finance Corporation (IFC), aimed at aiding the company’s expansion plans. However, the specific allocation of these funds remains undisclosed.
The company is also awaiting a decision from the MEC, Brazil’s Ministry of Education, regarding the reconsideration of medical seats at Unigranrio, one of its educational institutions. The impact of this decision on the number of medical seats available for Unigranrio’s programs is yet to be clarified.
Lastly, UBS has initiated coverage on Afya, assigning a Neutral rating to the company’s stock and predicting an above-average growth rate of 12% through 2028. This growth is anticipated to be fueled by inorganic expansion strategies, the approval of additional medical seats, and the expansion of continuing education and medical practice solutions. These are the recent developments for Afya Ltd.
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