AFC Gamma’s Strategic Shift to BDC: Enhanced Growth Potential and Diversified Investment Opportunities Justify Buy Rating

Michael Elias from TD Cowen maintains a Buy rating on AFC Gamma, despite lowering the price target to $9.00. AFC Gamma is transitioning from a mortgage REIT to a Business Development Company by Q1 2026, expanding its lending beyond the cannabis industry. This strategic shift is expected to enhance growth and diversify investments. Despite mixed Q3 results, the company plans to reinvest principal repayments into stable sectors, potentially improving loan quality and financial performance, justifying the Buy rating.

AFC Gamma (NASDAQ:AFCG) Posts Earnings Results, Misses Expectations By $0.03 EPS

AFC Gamma reported Q3 earnings of $0.16 per share, missing the consensus estimate of $0.19. Revenue was $6.53 million, slightly below the expected $6.55 million. The company had a positive return on equity of 10.06% but a negative net margin of 25.35%. Despite the earnings miss, AFC Gamma's stock rose 1.5% to $3.29. The company announced a quarterly dividend of $0.15, yielding 18.2%. Insider purchases were reported, with CEO Daniel Neville and Director Leonard M. Tannenbaum buying shares. Analysts have a consensus rating of 'Reduce' with a target price of $5.75.

Afc Gamma, Inc. Reports Q3 2025 Financial Results

Afc Gamma, Inc. (AFCG) reported a Q3 2025 net loss of $12.5 million, down from a net income of $1.4 million in Q3 2024. Revenue from interest income decreased to $6.5 million from $8.9 million year-over-year. Total assets fell to $288.7 million from $402.1 million at the end of 2024. The company is expanding its investment strategy beyond the cannabis sector and is considering a conversion to a business development company while focusing on diversifying its portfolio and exploring new lending opportunities.

Afc Gamma, Inc. Earnings Call: Strategic Shift Amid Challenges

Afc Gamma, Inc. held its Q3 earnings call, highlighting a strategic shift towards becoming a Business Development Company (BDC) with over 94% shareholder support. The company reported significant loan payoffs totaling $43 million, but also faced challenges, including a net loss of $12.5 million and non-performing loans. The board approved an expanded investment mandate beyond cannabis, aiming for diversification. Dividends for Q4 2025 were suspended due to anticipated losses. The transition to a BDC is expected to complete in 2026, with a focus on growth and diversification despite ongoing financial hurdles.

Advanced Flower Capital | 10-Q: FY2025 Q3 Revenue: USD 8.162 M