It was an unkind cut for real estate stock Medical Properties Trust (NYSE:MPW) today as an analyst took aim and suggested some potential problems ahead for the stock. Investors took the analyst warning to heart and also took over 9% of Medical Properties’ market cap with them in their rush for the exits.
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The unkind cut in question came courtesy of Stifel, whose analyst, Stephen Manaker, lowered Medical Properties from Buy to Hold. Manaker declared that a combination of persistently high-interest rates and increasing difficulty in actually getting credit is posing some serious problems for tenants everywhere. Given that Medical Properties Trust is basically a giant landlord, that’s a problem that hits exactly where Medical Properties lives.
A previous deal is also coming back to give Medical Properties some trouble, as it sold three hospitals in Connecticut to Prospect Medical Holdings. That deal was subject to Yale New Haven Health buying Prospect’s hospitals in a similar transaction, but new word says Yale and Prospect are dickering behind the scenes. That may push Medical Properties’ take—$457 million at last report—down accordingly.
Yet, there is optimism to be had. One analyst pointed out that Medical Properties has already reduced its dividend payment in a bid to husband cash, and that new payment should be a lot easier to keep up with. Further, despite the credit crunch and soaring interest rates—not to mention soaring inflation—the lack of COVID-19 serving as a burden to hospitals should prove helpful as well. Regular surgeries—the kind that produce cash flow—can start up again in earnest without an unknown disease and a massive government reaction.
Is Medical Properties Trust a Buy, Hold, or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on MPW stock based on two Buys, four Holds, and four Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average MPW price target of $7.22 per share implies 70.89% upside potential.
