Medical Properties Trust (MPW) stock is recovering: Is it still a buy?

Medical Properties Trust (NYSE: MPW) stock price has bounced back in 2024 as some investors have bought the dip. After plunging to a low of $2.91 in January, the stock has soared by more than 50% to $4.18. This rally has brought its market cap to over $2.5 billion.

Is it safe to buy MPW?

Medical Properties Trust is a leading American Real Estate Investment Trust (REIT) that focuses on the healthcare sector. It has over 400 properties and a presence in 9 countries like the US, UK, Switzerland, and Germany.

MPT has been one of the most embattled companies in the past few years, as I have written before. Its biggest challenge is that Steward, one of its biggest tenants, has moved into a liquidity crisis. It has struggled to pay its rent and there is a significant risk that it will go bankrupt.

The challenge for Medical Properties Trust is that it has done major deals with Steward before. In total, over $1 billion is at risk if Steward implodes. In the most recent earnings, MPT said that it was pleased with the actions being taken by Steward and its advisors. 

This progress is encouraging but I believe that it will take a longer time before these strategies start to bear fruit. In this case, there is a high probability that MPT will need to provide additional financing to the company. It recently gave it a $60 million bridge loan in January.

The recent MPW stock price jump is a sign that investors believe that its turnaround strategy will work out. The company is in the process of selling properties as it seeks to boost its liquidity. It hopes to raise over $2 billion from these asset sales. 

Medical Properties Trust is seeking to turn its business around this year ahead of key maturities in 2025 and 2026. It has over $490 million in maturities this year followed by $1.9 billion in 2025 and $3.5 billion in 2026.

The company will likely pay this year’s maturities easily. It also expects that its asset sales will help it pay next year’s maturities well. The challenge will come in 2026, when it will need to pay over $3.5 billion. 

Medical Properties Trust stock forecast

The weekly chart shows that the MPW stock price has been in a strong bearish trend in the past few months. It has crashed from its all-time high of $19.82 to about $4.29. Along the way, the stock has formed a descending channel as it formed lower lows and lower highs. It has remained below all moving averages.

The stock is also approaching the important resistance point at $5.40, its lowest swing in January 2016. Therefore, the outlook for the stock is still bearish as risks to its operations remain. In this case, I expect the stock to rise and retest the resistance at $5.40 and then resume the downward trend.