Medical Properties Trust bulls have good reason to love the stock: Low P/FFO, high yield, and also a potential turnaround. I also see an equally large downside due to high short interest, uncertain cash flow, and potential dividend sustainability issues. Due to debt levels, valuation should be examined by EV metrics too and is not as cheap as it seems.
Medical Properties (MPW) concluded the recent trading session at $4.77, signifying a -0.63% move from its prior day's close.
Medical Properties Trust (MPW 2.35%) has been under significant pressure over the past few years. The real estate investment trust (REIT) has had to navigate the bankruptcy of two top tenants and surging interest rates.
Medical Properties Trust faces challenges with Prospect's Chapter 11 bankruptcy, but benefits from Prospect's focus on California, where most leased assets are located. Private equity firms pose systemic risks to the healthcare sector, with bipartisan legislative efforts underway to address these issues. MPW is securing up to $2.5 billion in secured financing to pay off unsecured debt, lowering interest expenses and lifting dividend restrictions. Moody's upgrade followed immediately.
Zacks.com users have recently been watching Medical Properties (MPW) quite a bit. Thus, it is worth knowing the facts that could determine the stock's prospects.
It's been an interesting few years for Medical Properties Trust (MPW 2.63%), and not in a good way. But in this video, longtime Fool.com contributors Matt Frankel and Tyler Crowe discuss why the bleeding might finally have stopped.
Prospect's bankruptcy is not a negligible impact, as it can lead to a 10% loss in revenues for MPW. Rent coverage analysis gives reasons for caution with other tenants in MPW's portfolio. Declining revenues in the broader tail of operators shows MPW's issues to be broad-based across the portfolio. A large, fixed-rates debt burden is an overhang. And MPW is relying on higher cost funding in order to raise the money needed for debt principal payments.
Last year was another strong one for the stock market. The S&P 500 was up 23%, while the Nasdaq Composite rallied nearly 29%.
Medical Properties (MPW) has been one of the stocks most watched by Zacks.com users lately. So, it is worth exploring what lies ahead for the stock.
The big draw with regard to Medical Properties Trust (MPW 2.25%) today is its lofty 8% dividend yield. But this is a signal of a high level of risk in what amounts to a turnaround story, as the real estate investment trust (REIT) continues to deal with troubled tenants.
Medical Properties Trust's tenant, Prospect Medical, filed for Chapter 11 bankruptcy, but shares rose 7.8% as the market anticipated this and viewed it as de-risking. Despite Prospect's issues, Medical Properties Trust's exposure is limited, with Prospect accounting for only 6.8% of total assets and no recent rent payments. Medical Properties Trust aims to protect its California hospitals and complete the sale of Prospect's Connecticut facilities, expecting minimal impairments on its $509.7 million assets.
Medical Properties Trust (MPW -3.15%) got off to a challenging start last year. In January, the real estate investment trust (REIT) revealed that its top tenant at the time, Steward Health Care, was experiencing liquidity issues, which impacted its ability to pay rent.