Afya Limited (NASDAQ:AFYA) Shares Shorted: Short Interest Up 163.2% in September

Key Points

• Afya’s short interest surged 163.2% to 1.41 million shares as of September 15, representing about 1.5% of shares outstanding and 5.2 days of average trading volume.
• The company reported quarterly EPS of $0.43, ahead of the $0.40 analyst consensus, while revenue of $187.8 million fell slightly short of estimates. Shares recently traded near $13, close to their one-year low.
• Analyst sentiment remains cautious, with a consensus “Hold” rating and an average price target of $17.75; ratings range from “Strong Sell” to “Outperform.”

Afya Limited (NASDAQ:AFYA - Get Free Report) was the target of a large increase in short interest in the month of September. As of September 15th, there was short interest totaling 1,411,623 shares, an increase of 163.2% from the August 31st total of 536,316 shares. Based on an average trading volume of 274,094 shares, the short-interest ratio is presently 5.2 days. Currently, 1.5% of the shares of the company are sold short.

Afya Price Performance

NASDAQ:AFYA opened at $13.00 on Friday. The company has a debt-to-equity ratio of 0.39, a current ratio of 2.20 and a quick ratio of 2.20. The company has a 50 day moving average price of $14.00 and a 200-day moving average price of $14.33. Afya has a 1-year low of $12.75 and a 1-year high of $16.16. The firm has a market cap of $1.22 billion, a price-to-earnings ratio of 7.93, a price-to-earnings-growth ratio of 1.46 and a beta of 0.35.

Afya (NASDAQ:AFYA - Get Free Report) last announced its quarterly earnings results on Friday, August 14th. The company reported $0.43 earnings per share (EPS) for the quarter, topping analysts' consensus estimates of $0.40 by $0.03. Afya had a net margin of 20.55% and a return on equity of 17.58%. The firm had revenue of $187.80 million for the quarter, compared to the consensus estimate of $189.62 million. Equities research analysts forecast that Afya will post 1.86 EPS for the current year.

Analysts Set New Price Targets

Several research analysts recently issued reports on AFYA shares. JPMorgan Chase & Co. reduced their target price on shares of Afya from $21.50 to $21.00 and set a "neutral" rating for the company in a report on Monday, June 22nd. Zacks Research lowered shares of Afya from a "hold" rating to a "strong sell" rating in a report on Friday, August 21st. Weiss Ratings downgraded Afya from a "hold (c)" rating to a "hold (c-)" rating in a research report on Friday, July 31st. Bank of America reiterated a "neutral" rating on shares of Afya in a research note on Thursday, June 11th. Finally, Bradesco Corretora raised Afya to an "outperform" rating and set a $17.00 price objective for the company in a report on Thursday. One investment analyst has rated the stock with a Buy rating, five have assigned a Hold rating and one has given a Sell rating to the stock. According to MarketBeat, the stock presently has a consensus rating of "Hold" and an average price target of $17.75.

Afya News Roundup

Here are the key news stories impacting Afya this week:

• Positive Sentiment: Merger creates significant scale. Afya and Yduqs signed a binding agreement to combine their operations, creating a group with approximately 1.6 million students and R$9.4 billion in revenue. Afya shareholders are expected to own about 69.3% of the combined company. Afya Limited and Yduqs Enter Into Merger Agreement
• Positive Sentiment: Potential for stronger cash generation and synergies. Management commentary highlighted faster cash-flow generation and additional consolidation opportunities. Analysts cited potential synergies of as much as R$2.8 billion, while the transaction is also reported to include approximately R$750 million in dividends. JP Morgan merger scenarios
• Positive Sentiment: Analyst valuation remains above the market price. AFYA has a consensus price target of $17.75, implying substantial potential upside from recent trading levels. Afya consensus target price
• Neutral Sentiment: Listing and transaction structure remain important questions. Reports suggest the merger could affect AFYA’s Nasdaq listing, while the share-exchange structure, approvals and integration plans still need to be completed. These uncertainties may be limiting the immediate benefit of the announcement. Afya and Yduqs listing report
• Negative Sentiment: Short interest increased sharply. One report showed short interest rising 163.2% to 1.41 million shares as of September 15, equal to roughly 5.2 days of average volume. A separate report listed zero short interest, indicating inconsistent data; the increase should therefore be treated cautiously. Zacks Strong Sell list
• Negative Sentiment: Near-term sentiment is cautious. Zacks added AFYA to its No. 5, or “Strong Sell,” ranking, adding pressure while investors assess merger execution and the company’s future trading venue.

Insider Buying and Selling

In other Afya news, VP Lélio de Souza, Jr. sold 36,204 shares of Afya stock in a transaction that occurred on Wednesday, July 1st. The shares were sold at an average price of $15.00, for a total transaction of $543,060.00. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which can be accessed through this hyperlink. Insiders own 0.80% of the company's stock.

Institutional Investors Weigh In On Afya

A number of institutional investors have recently modified their holdings of the business. Public Employees Retirement System of Ohio acquired a new position in Afya in the 2nd quarter worth about $67,000. Engineers Gate Manager LP purchased a new position in Afya during the second quarter worth approximately $325,000. Finally, Banco BTG Pactual S.A. acquired a new stake in Afya in the fourth quarter valued at approximately $462,000. 88.02% of the stock is currently owned by institutional investors and hedge funds.

About Afya

Afya Limited is a Brazilian medical education and technology company that operates an integrated platform for physicians and medical students. The company provides education and professional development throughout the medical career cycle, from undergraduate training and residency preparation to continuing medical education and specialization programs.

Afya's offerings include medical schools, preparatory courses, postgraduate and continuing education programs, digital learning tools, and clinical practice technologies.

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