UBS Starts Afya Ltd. (AFYA) at Neutral

UBS analyst Andre Salles initiates coverage on Afya Ltd. (NASDAQ: AFYA) with a Neutral rating and a price target of $19.50.

The analyst comments: "We are initiating coverage with a Neutral rating and a PT of US$19.50/share. We believe revenue growth is the main source of debate for Afya. We estimate Afya can support above-average growth of 12% until 2028 (vs. 8% for the sector). In our view, that growth could be supported by: 1) inorganic expansion; 2) approval of potential medical seats; and 3) continuing education and medical practice solution expansion. However, as Afya is trading at 10x 12-month-forward PE, we estimate the market is pricing in a 12% 2023-28E revenue CAGR (in line with UBSe) and an average FCF margin of 7% (vs. UBSe of 8.7%). In our view, the estimates implied by the current share price fairly price in Afya's revenue growth opportunities and execution risks, supporting our Neutral rating."

For an analyst ratings summary and ratings history on Afya Ltd. click here. For more ratings news on Afya Ltd. click here.

Shares of Afya Ltd. closed at $17.30 yesterday.

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