Earnings Beat: Afya Limited Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

It's been a good week for Afya Limited (NASDAQ:AFYA) shareholders, because the company has just released its latest quarterly results, and the shares gained 2.6% to US$19.61. Revenues were R$936m, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of R$2.76 were also better than expected, beating analyst predictions by 13%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Afya after the latest results.

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Taking into account the latest results, the consensus forecast from Afya's eight analysts is for revenues of R$3.73b in 2025. This reflects a meaningful 8.4% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to surge 34% to R$10.12. Yet prior to the latest earnings, the analysts had been anticipated revenues of R$3.71b and earnings per share (EPS) of R$8.31 in 2025. Although the revenue estimates have not really changed, we can see there's been a massive increase in earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.

View our latest analysis for Afya

There's been no major changes to the consensus price target of US$19.77, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Afya analyst has a price target of US$24.16 per share, while the most pessimistic values it at US$15.96. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Afya is an easy business to forecast or the the analysts are all using similar assumptions.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that Afya's revenue growth is expected to slow, with the forecast 11% annualised growth rate until the end of 2025 being well below the historical 25% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 11% annually. Factoring in the forecast slowdown in growth, it looks like Afya is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Afya's earnings potential next year. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Afya. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Afya analysts - going out to 2027, and you can see them free on our platform here.

You can also view our analysis of Afya's balance sheet, and whether we think Afya is carrying too much debt, for free on our platform here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.