Has Medical Properties Trust finally bottomed out?

on Mar 28, 2024
  • MPW stock surged over 18% due to Steward Health Care's physician network sale.
  • Previous challenges with Steward Health weighed heavily on MPW's stock.
  • Positive short-term indicators hint at further upside potential.

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Shares of Medical Properties Trust, Inc. (NYSE: MPW) surged over 18% by the close of trading on Wednesday, driven by breaking news regarding its primary tenant, Steward Health Care. Steward Health Care has reached an agreement to sell its physician network to Optum Care, a subsidiary of UnitedHealth (NYSE: UNH).

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MPW’s stock has fallen dramatically in recent quarters due to challenges with its largest tenant, Steward Health Care, which contributes more than 20% of MPW’s annual revenue. Steward’s financial difficulties, including unpaid rents and outstanding loan obligations to MPW, have weighed heavily on the company.

Earlier this year, MPW informed investors that proceeds from the sale of Steward’s assets would be used to repay all outstanding obligations to MPW. This announcement fueled the significant surge in MPW’s stock price on Wednesday.

While this uptick is promising for MPW investors, the question remains: does this mark the end of the stock’s downward trajectory? Let’s delve deeper to assess the outlook.

MPW’s Continuous Descent

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MPW once stood tall as one of the nation’s premier Health Care REITs, boasting a vast portfolio of top-tier, diversified assets. Its stellar performance reflected this reputation, with the stock doubling between 2018 and early 2020, cementing its status as a standout player in the healthcare REIT landscape.

However, the onset of the COVID-19 pandemic in March 2020 abruptly altered MPW’s trajectory. After reaching highs exceeding $24 in February 2020, the stock plummeted amidst the crisis. Remarkably, it clawed back all losses during the subsequent market surge, revisiting the $24 threshold in early 2022.

MPW chart by TradingView

Yet, this resurgence proved short-lived. Following a double top formation above $24, MPW embarked on a downward spiral spanning two years. The stock hit a nadir below $3 in January of this year, marking a stark contrast to its former glory.

MPW has since mounted a robust recovery, currently trading above $4.70. Yet, the question looms: is there further upside potential, or are there clouds on the horizon?

MPW’s soaring prospects

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MPW’s long-term charts are indicating a positive trend. The MACD indicator remains firmly positive, accompanied by a steady upward trend in the RSI. Of notable significance is the imminent breakthrough of its long-standing downward trendline, heralding a potential shift in market sentiment.

MPW chart by TradingView

This optimistic outlook is further corroborated by insights from short-term charts. Recent developments, such as the MACD turning positive, coupled with the impending breach of the long downward trendline, which intersects near the 23.6% Fibonacci retracement level from the previous high at $4.77, suggest a potential reversal in the stock’s fortunes.

Wednesday’s market activity painted a bullish picture, indicating a resurgence of investor confidence. Should MPW sustain trading above $4.77, anticipate advances towards near-term Fibonacci resistances at $5.92, $6.84, and $7.77.

For bearish investors, exercising caution is prudent, especially if MPW maintains its position above $4.77. Short-term momentum favors the bulls unless there’s a complete reversal of Wednesday’s gains, with a retest of the $4 threshold indicating a shift in sentiment.


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