In a focused sector note on Brazil's Education Services industry, Morgan Stanley selected several names it believes are best equipped to handle regulatory shifts while capturing potential enrollment gains and improved macro conditions into 2026. The bank's assessment centers on valuation sensitivity to interest-rate moves, exposure to distance-learning (DL) regulatory risk, pricing power, margins and balance-sheet flexibility.
Anima Educação
Morgan Stanley identifies Anima as one of the more attractive opportunities in the space, citing favorable valuation multiples and pronounced sensitivity to cuts in interest rates. While the firm notes that Anima's historical growth has been slower relative to some peers, it sees several dynamics turning more supportive: regulatory headwinds have eased and pricing power is gradually re-emerging. The companys lower reliance on DL shields it from the worst of potential regulatory shocks, and its strategy emphasizing early resumption of face-to-face instruction could bolster student engagement and retention - two drivers the bank views as key to value through 2026.
Cogna Educa
Cogna is described as a high-beta option with substantial exposure to DL programs, notably in nursing - an area facing tightened regulatory constraints. Morgan Stanley highlights Cogna's advantages of scale, a wide city footprint and the ability to convert DL demand into on-campus enrollment as meaningful mitigants. The bank also points to significant operational leverage that could amplify recovery as regulatory transitions take place. That mix implies higher risk but also greater embedded turnaround optionality compared with more defensive names.
YDUQS
YDUQS is singled out for a diversified academic portfolio and demonstrated execution in premium health programs. Morgan Stanley characterizes the company as structurally resilient, supported by a blend of on-campus and hybrid delivery formats. The bank notes that YDUQS's balance sheet has improved in recent years, which positions the company to consider selective M&A once regulatory clarity improves. YDUQS also maintains leading margins across several verticals, making it a common holding in institutional portfolios focused on the sector.
Afya
Afya is framed by Morgan Stanley as a quality defensive compounder, anchored by a dominant position in Brazil's regulated medical-school market. Although the supply of medical seats is expanding, the bank emphasizes Afya's superior operating efficiency, pricing power and strong acquisition track record. Morgan Stanley also highlights Afya's digital health services platform as an additional growth layer that may be underappreciated by the market. Given its limited exposure to DL regulation, Afya is presented as a relatively safer long-term choice.
Vitru Educa
Vitru is identified as one of the most DL-heavy operators, a positioning that increases near-term regulatory pressure. At the same time, Morgan Stanley notes material upside exists if the company successfully transitions to hybrid models. The bank underscores Vitru's large enrollment scale in nursing and health programs, where some lost DL demand could be partially recaptured through on-campus expansion. While the name carries higher risk, it also offers asymmetric upside should regulatory enforcement be flexible or delayed.
Ser Educacional
Ser Educacional is portrayed as a turnaround candidate with improving fundamentals and exposure to underserved regions within Brazil. Morgan Stanley highlights Ser's focus on efficiency gains, expansion of hybrid offerings and strengthening of its health-care verticals. Although smaller than many peers, the bank sees the company's operational improvements and strategic repositioning as factors that could enable outperformance as sector conditions stabilize.
Across the names, Morgan Stanleys analysis centers on several recurring themes: sensitivity to interest-rate moves, the extent of DL exposure and resulting regulatory vulnerability, pricing power as a lever for margin recovery, and balance-sheet strength as a determinant of strategic optionality. The bank grades each company along those lines to identify relative winners and higher-risk turnaround situations as Brazil's education sector navigates regulatory change into 2026.