Medical Properties Trust (MPW) stock: don’t catch a falling knife

Medical Properties Trust (NYSE: MPW) stock price has been a disaster. The shares have plunged from its all-time high of $20.45 in January 2022 to the current $5.80. It is now sitting at the lowest level since August 2013.

Wall of maturities ahead

Medical Properties Trust is a leading Real Estate Investment Trust (REIT) that provides buildings to companies in the healthcare industry. It has 438 properties in the US, UK, Switzerland, and Germany.

MPW has been under pressure in the past few months. For one, like Block and Adani Group, the company came under a short-seller attack in 2022. Hedeye, a leading American company, warned about the state of the company, including valuation and aggressive accounting.

Medical Properties Trust is also facing numerous challenges. The biggest challenge is that it has a wall of maturities in the next 12 to 36 months. For one, the company has a maturity of 400 million pounds maturity coming later this year. It also has a British pound maturity coming in 2024 followed by several more in the next few years. In a statement, the management said:

“We have the liquidity and liquidity resources to simply write a check for that. The only maturity, again, I’m repeating what we’ve been going through for a while, but the only maturity in 2024 then is the Australian term loan, which we’ve already paid down a significant majority of that.”

As a result, the company decided to slash its dividend in a bid to preserve cash.  It slashed the payout by half to $0.15. This is notable since people buy REIT stocks solely for their dividends. 

MPW decided to slash its payout because it was unsustainable. For one, its total annual payouts rose to $568 million in 2020 to over $700 million in 2022. In the same period, its cash flows dropped from $513 million to $421 million.

Worse, MPW’s revenue and profits have been going in the wrong direction. Its revenue dropped by 15.70% to $337 million while its GAAP loss was $0.07. 

Medical Properties Trust stock price forecast

MPW chart by TradingView

The weekly chart shows that the MPW share price has been in a freefall in the past few months. The stock formed a death cross pattern in October 2022. In price action analysis, this pattern is one of the most bearish signs. 

MPW stock price has crashed below the key support at $6.72, the lowest level in March. It also flipped the important support at $9.51, the lowest swing in March 2022. The Relative Strength Index (RSI) is approaching the oversold level.

Therefore, I believe that the shares will continue falling in the coming weeks. This decline could see it move to the key support at $5. In the long term, we can’t rule out a situation where the shares bounce back.