What happened to the Medical Properties Trust (MPW) stock?
The Medical Properties Trust (NYSE: MPW) stock price has stabilized in the past few months, erasing some of the losses it made in 2023. It has bounced back by over 74% from its lowest point in January, giving it a market cap of over $2.7 billion.
Turnaround is underway
Medical Properties Trust has done well this year even as the company continues facing substantial challenges. It has a substantial debt load and is facing issues with its core clients like Prospect and Steward Health Care.
Steward, its biggest client, filed for bankruptcy protection while Prospect has struggled to pay rent recently. MPW has done well after Steward’s bankruptcy because the proceedings will help it to restructure its debt and even sell some of its locations.
A key challenge for Steward is that UnitedHealth’s Optum business has backed out of a deal to buy Steward’s physician business.
Steward had a deadline on Monday to receive bids from preferred operators. In a statement, Governor Maura Healey has said that she prefers a situation where all of Steward’s hospitals are moved into the hands of another operator.
However, the concern is that the substantial rents it owes Medical Properties Trust has made a deal unattractive to other operators. We will know whether the company had bids for its hospital facilities this week.
A deal would be in the best interest of MPW since it will likely solve its rental issues under a new company and management. Even before it filed for bankruptcy, Steward was constantly behind in its rental payments.
MPW earnings ahead
The next important catalyst for the Medical Properties Trust will be its upcoming results, which will show how the company is fairing after Steward’s bankruptcy.
It is unclear when the company will publish its results. But since its last results came out on May 29th, chances are that it will deliver its numbers in August.
The most recent results showed that Medical Properties Trust’s total revenue crashed to over $271 million in the first quarter from $350 million a year earlier. This drop happened as the rent billed fell from $248 million to $199 million in the quarter.
Most importantly, the company generated a big loss of over $875 million after it made a profit of over $33 million a year earlier.
Therefore, the upcoming results will likely be worse since Steward likely stopped paying its rent during the bankruptcy process.
A key risk for Medical Properties Trust is that it faces huge maturities in the coming years. Its ability to handle these payments will depend on the progress on Steward and the Federal Reserve.
If Steward makes progress, and if the Fed starts cutting interest rates, the company would be in a good position to negotiate with its creditors.
The most recent results shows that Steward has maturities worth $133 million this year. It can handle these payments easily. It then faces maturities worth $1.3 billion in 2025, $2.7 billion in 2026, and $1.6 billion in 2027.
Medical Properties Trust stock price analysis
The daily chart shows that the MPW share price bounced back and reached a high of $6.36 in May. That was an important level since it was slightly above the 38.2% Fibonacci Retracement level.
It then retreated and reached a low of $3.93 in July and has now bounced back. It is nearing the lower side of the ascending channel. There are signs that it has formed a break and retest chart pattern, a popular continuation sign.
Therefore, the stock will likely resume the downward trend and retest the crucial support at $3.93, its lowest point this month.
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