Medical Properties Trust Faces Analyst Downgrades: Lingering Concerns Over Management And Dividend Sustainability Spotlighted

A couple of analysts downgraded Medical Properties Trust Inc MPW following weaker-than-expected Q2 FY23 results.

On August 8, Medical Properties Trust reported Funds from operations (FFO) of $0.48, missed estimates of $0.70, and revenue of $337.39 million, also missed the consensus of $351.38 million. 

Raymond James analyst Jonathan Hughes reduced the rating to Underperform from Strong Buy.

The analyst is bearish on the company underperforming its healthcare REIT peers and the REIT average by >40% bps over the past 18 months.

Hughes notes improving operator fundamentals as the sole positive in recent quarters, which is negated by concerns related to management, disclosure transparency, operator health, leverage, and dividend sustainability, among others.

The analyst thinks MPW will spend several years to regain investor confidence and correct its cost of capital, thereby hindering its growth prospects. 

Consequently, Hughes lowered the FFO estimate to $1.54 (from $1.61) for 2023 and $1.51 (from $1.56) for 2024.

Also, B of A Securities downgraded the stock to Neutral from Underperform rating at a lowered price target of $8 from $9.

The analyst is bearish due to the company's increased exposure to top tenant Steward via the ABL facility led by private credit funds and the absence of clarity on unpaid cash rent from Prospect. 

The analyst revised the FY24 AFFO estimate to $1.34 from $1.29.

Price Action: MPW shares are trading lower by 2.70% at $7.91 on the last check Friday.