Medical Properties Trust stock price: buy the dip or sell the MPW rip?
- The Medical Properties Trust share price has dropped by over 77% from its all-time high.
- The company has a short interest of almost 30% as concerns remain.
- Its recent earnings report missed estimates and slashed its forward guidance.
Medical Properties Trust (NYSE: MPW) stock price has sunk to its lowest level since August 2012, making it one of the worst-performing REITs in the US. The shares were trading at $4.60 on Monday, down by over 77% from its highest level on record. Its market cap has plunged to over $2.7 billion.
Short interest risesCopy link to section
Medical Properties Trust is a Real Estate Investment Trust (REIT) that acquires and manages assets in the healthcare sector. Most of its properties are in the general acute care hospitals followed by behavioral health facilities and inpatient rehabiltation facilities. Its assets are valued at over $19 billion.
MPW has been in trouble in the past few months, which explains why its stock has plunged while its short interest is nearing 30%. Short interest is a figure that shows the percentage of shares that are held short by investors. This means that these short-sellers have benefited as the stock plunged.
Medical Properties Trust’s woes have seen it slash its dividend and report weak financial results. It reported weak financial results a few weeks ago. The results revealed that its net income dropped to $117 million in Q3, down from $222 million in the same quarter in 2022.
Its Net Funds From Operations (NFFO) came in at $226 million, down from $272 million in Q3’22. As a result, the company lowered its forward guidance of its net income. It expects that its net income will be between $0.36 to $0.38.
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The challenge for Medical Properties Trust is that its balance sheet is quite leveraged, with over $10.1 billion in debt. This is a sizable amount considering that its total assets stand at about $19.1 billion.
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Worse, some of its debt is based on a floating rate, which equals to about 15% of the total debt capital. Floating debt is risky in a period when interest rates are expected to remain at a 22-year high for months.
Despite these challenges, the management has made some important but tough decisions. It has slashed its dividend payouts in a bid to preserve cash. It is also focused on paying back the credit revolver facility of about $1.5 billion and selling some of its assets.
Medical Properties Trust share price forecastCopy link to section
Turning to the weekly chart, we see that the MPW share price has been in a freefall in the past few months. The stock recently retreated below the key resistance point at $6.70, the lowest swing on March 20th.
It also slipped below the crucial support at $9.54, the lowest point in March 2020. It remains below the 50-week and 100-week Exponential Moving Averages (EMA). The Relative Strength Index (RSI) has moved slightly above the oversold level. Therefore, the outlook for the stock is bearish for now, with the next point to watch will be at $3.50. This view is in line with my last MPW forecast. Still, I suspect that the company will bounce back in 2024 as the Fed starts or provide hints about rate cuts.