Shareholders of Afya Limited (NASDAQ:AFYA) will be pleased this week, given that the stock price is up 12% to US$21.87 following its latest annual results. Revenues were in line with forecasts, at R$1.2b, although statutory earnings per share came in 15% below what the analysts expected, at R$3.12 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. 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.

View our latest analysis for Afya

After the latest results, the seven analysts covering Afya are now predicting revenues of R$1.66b in 2021. If met, this would reflect a substantial 38% improvement in sales compared to the last 12 months. Per-share earnings are expected to surge 47% to R$5.19. Before this earnings report, the analysts had been forecasting revenues of R$1.66b and earnings per share (EPS) of R$5.28 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

There were no changes to revenue or earnings estimates or the price target of R$166, suggesting that the company has met expectations in its recent result. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Afya analyst has a price target of R$32.47 per share, while the most pessimistic values it at R$24.74. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

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. It's pretty clear that there is an expectation that Afya's revenue growth will slow down substantially, with revenues to the end of 2021 expected to display 38% growth on an annualised basis. This is compared to a historical growth rate of 51% over the past three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 19% per year. So it's pretty clear that, while Afya's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at R$166, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Afya going out to 2025, and you can see them free on our platform here..

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

This article by Simply Wall St is general in nature. 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.

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