Adamas Trust Gains Analyst Backing as Strategic Shift to Agency RMBS Fuels Optimism

Adamas Trust, Inc. (NASDAQ: ADAM), a real estate investment trust focusing on residential mortgage assets, is drawing renewed Wall Street attention following a strategic portfolio realignment. Analyst firm B. Riley Securities initiated coverage on January 6 with a Buy rating and a $9 price target, positioning ADAM among the more compelling value opportunities in the REIT sector.

The firm's bullish stance hinges on Adamas Trust's deliberate shift in its investment composition. The portfolio now holds 63% in Agency residential mortgage-backed securities (RMBS)—loans backed by government-sponsored entities like Fannie Mae and Freddie Mac. This move towards higher-quality, lower-risk assets is expected to command a valuation premium compared to peers heavily weighted in more volatile non-Agency securities. "In the current interest rate environment, a fortified Agency RMBS book provides a more stable earnings base and reduces credit risk exposure," the B. Riley report noted.

Supporting the outlook, B. Riley issued forward-adjusted EPS estimates of $0.90 for FY25, $1.00 for FY26, and $1.15 for FY27. The projections anticipate an expansion in earnings through the first three quarters of 2025, fueled by increased mortgage acquisitions and lending activities. The analyst also expressed confidence that shares could trade closer to GAAP book value as origination volumes grow, while the quarterly dividend of $0.23 per share appears well-covered by earnings.

As an internally managed REIT, Adamas Trust specializes in acquiring, financing, and managing single-family and multi-family residential mortgage assets. Its strategic pivot comes at a time when investors are increasingly scrutinizing asset quality and interest rate resilience within the mortgage REIT space.

Market Voices: A Mixed Bag of Reactions

Eleanor Vance, Portfolio Manager at Sterling Capital: "This is a prudent strategic shift. The market has been punishing mREITs with opaque or risky credit exposures. Adamas's move to anchor its portfolio with Agency paper should improve its multiple over time, assuming execution remains solid."

Marcus Thorne, Independent Financial Advisor: "While the analyst call is positive, I'm cautiously optimistic. The entire mREIT sector remains highly sensitive to Fed policy. Their projected earnings growth is promising, but it's contingent on a stable-to-declining rate environment, which is far from guaranteed."

David Chen, Editor at 'The Bearish Brief' blog: "This is classic 'dress up the portfolio' narrative spin. Shifting to Agency RMBS now, after the rate-hike damage is done, is like closing the barn door after the horse has bolted. A $9 target seems wildly optimistic for a stock that's been a perennial underperformer. It's a value trap, not a value play."

Rebecca Shaw, Retail Investor & REIT Enthusiast: "As a long-term holder, I welcome the clarity and the focus on quality. The covered dividend is a key comfort factor for me. This feels like management is playing the long game to build a more durable business, not just chasing short-term yields."