Michael Elias, an analyst from TD Cowen, maintained the Buy rating on AFC Gamma. The associated price target was lowered to $9.00.
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Michael Elias has given his Buy rating due to a combination of factors including AFC Gamma’s strategic shift and future growth potential. The company is transitioning from a mortgage REIT to a Business Development Company (BDC) by the first quarter of 2026, which will allow it to expand its lending activities beyond the cannabis industry. This strategic pivot is expected to enhance AFC Gamma’s investment opportunities and drive faster loan and DE/share growth over time.
Despite mixed third-quarter results, including lower-than-expected revenue and EBIT, the company managed to maintain its DE/share and received significant principal repayments. These repayments are anticipated to be reinvested into more stable and diversified sectors, which could improve the quality of its loan book. Although the initial returns on non-cannabis investments might be lower, the broader investment scope is expected to stabilize yields and improve overall financial performance, justifying the Buy rating.
Based on the recent corporate insider activity of 21 insiders, corporate insider sentiment is positive on the stock. This means that over the past quarter there has been an increase of insiders buying their shares of AFCG in relation to earlier this year.