AFYA: Preferred Share Buyback Will Support Medium-Term Earnings Outlook

Analysts have modestly trimmed their price target on Afya, reducing fair value by approximately 1 percent to about $18.53. This reflects expectations for slower revenue growth and slightly lower profit margins, partly offset by a higher assumed future P/E multiple.

What's in the News

• Afya reaffirmed its 2025 earnings guidance, targeting revenue between BRL 3,670 million and BRL 3,770 million, signaling confidence in its medium term growth outlook (company guidance).
• The company agreed to repurchase all 150,000 Series A perpetual convertible preferred shares from SoftBank affiliate SBLA Holdco LLC for BRL 831.6 million, with closing expected on November 3, 2025, and plans to cancel these shares after completion (preferred stock buyback).
• Afya completed a share buyback tranche between August 13, 2025 and September 30, 2025, repurchasing 136,507 shares, or about 0.15 percent of outstanding shares, for BRL 11.13 million under its previously announced program (buyback update).
• The company is preparing for an analyst and investor day focused on its strategic evolution, business priorities and long term value creation framework (analyst and investor event).

Valuation Changes

• Fair value estimate edged down slightly from $18.78 to $18.53 per share, a reduction of roughly 1 percent.
• Discount rate decreased marginally from 10.99 percent to about 10.92 percent, reflecting a modestly lower perceived risk profile.
• Revenue growth was reduced meaningfully from about 7.97 percent to 5.54 percent, indicating a more cautious outlook on top line expansion.
• Net profit margin was lowered from approximately 25.62 percent to 22.84 percent, implying expectations for somewhat weaker profitability.
• Future P/E increased from 11.37x to about 12.95x, signaling a slightly higher assumed valuation multiple despite softer fundamentals.