Medical Properties Trust (MPW) stock: It’s still risky to buy the dip

Medical Properties Trust (NYSE: MPW) stock price has been in a freefall this year as concerns about its maturities and dividend safety continue. The shares crashed to a low of $4.67 on Monday, its lowest level since 2012. It has dropped by over 75% from its all-time high, giving it a market cap of $2.8 billion.

Wall of maturities ahead

2023 has not been a good year for Real Estate Investment Trust (REIT) as interest rates have soared to the highest level in more than 20 years. Most REIT stocks are deeply in the red as some, like WP Carey and SL Green slashed their dividends.

Medical Properties Trust has become one of the worst-performing REITs as its shares have plunged from $20 in January 2022 to below $5. It is easy to explain why the company is languishing. 

The company’s 10k report shows that the firm has over $10 billion in debt, a high number since its equity is worth just $2.8 billion. In December, it had $448 million maturing this year, $944 million in 2024, and $1.3 billion in 2025. The other maturities are $2.5 billion, and $1.6 billion in 2026 and 2027. 

The debt maturing in 2024 has a maturity of 3.6% while 2025 and 2026 have rates of 2.7% and 4.2%, respectively. Therefore, the company will need to refinance these funds at a higher interest rate. The Fed has hinted that it will deliver another 0.25% hike later this year and leave them high for longer.

Therefore, it makes sense that Medical Properties Trust decided to slash its dividend in September. The issue is whether these savings will help the company pay its debt well in the coming months.

In its recent earnings statement, MPW said that it expects that it will make $658 million in adjusted funds from operations (AFFO). If we deduct about $360 million in dividend payments, the company will have about $298 in retained earnings, which is not enough to cover the payments. This means that the company will likely need to slash its dividend again.

Medical Properties Trust stock price analysis

MPW chart by Tradingview

The weekly chart shows that the MPW share price has plunged hard in the past few months. It recently dropped below the important support level at $9.51, the lowest swing in March 2020 and in January this year. It has also slipped below the support at $6.77 (May 15th low).

The stock has crashed below the 50-week and 100-week exponential moving averages (EMA). At the same time, the Relative Strength Index (RSI) and Stochastic Oscillator have moved to the oversold level. 

Therefore, there is a likelihood that the Medical Properties Trust stock price will continue falling as sellers target the key psychological level at $4.0.