Medical Properties Trust stock popped after earnings: I’m not buying

Medical Properties Trust (NYSE: MPW) stock price is back. The shares pumped by more than 14% on Thursday after the hospital landlord published encouraging financial results. They rose to $5.07, much higher than the year-to-date low of $4.45. 

MPW strong earnings

Medical Properties Trust has been a highly embattled Real Estate Trust (REIT). Its stock has melted down by over 60% from its highest level this year and by 75% from its all-time high. Along the way, the company’s market cap has shed billions of dollars, giving it a market value of over $2.6 billion.

The biggest event happened a few months ago when the company decided to slash its dividends in a bid to conserve cash. It believes that the dividend cut will help to propel it ahead as a series of maturities near. 

In a statement, the company said that its net income came in at 19 cents in the third quarter. Its Normalised Funds from Operations (NFFO) came in at 38 cents. This happened as the company managed to collect rent payments from Prospect, a company that has struggled in the past. 

Its net income for the quarter stood at over $117 million, much lower than the $222 million it made a year earlier. Its NFFO for the quarter also dropped to $226 million, down from the previous $272 million. In a statement, the company’s CEO said:

“We have launched a capital allocation strategy to increase liquidity, effectively address our debt maturities and solidify through a right-sized cash dividend our business for sustained long-term shareholder creation.”

Still, Medical Properties Trust faces numerous challenges as interest rates remains at an elevated level. For one, it is selling properties in a bid to pay back some of its upcoming maturities. The risk is that these properties could attract lower values as rates remain restrictive.

Some analysts believe that the company will need to cut its dividend again, possibly in 2024. Dividends are an important part of companies like MPW since investors buy these stocks for these payouts.

Medical Properties Trust stock price forecast

MPW chart by TradingView

The weekly chart shows that the MPW stock price has been in a strong downward trend in the past few months. It recently dropped below the key support at $9.54, the lowest swing in March 2020.

Medical Properties Trust share price has also plunged below the key support at $6.70, the previous YTD low. It remains below the 50-day and 100-day moving averages. This is a signal that the shares will likely continue falling as sellers target the key support at $4. 

In the short term, the stock could make some positive moves now that it has formed a bullish engulfing pattern.