Medical Properties Trust (NYSE:MPW) stock closed 6.2% lower on Thursday after The Bear Cave report flagged several issues for MPW. The report highlighted multiple challenges, including concerns over its tenant base and doubtful representations, among others. Given these concerns, investors should take caution before investing in the shares of this Real Estate Investment Trust.
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The Concerns for MPW
Investors should know that The Bear Cave report also highlighted MPW’s transaction with Pipeline Health last year.
In July 2021, Pipeline Health and Medical Properties Trust entered into a sale-leaseback agreement. Per the contract, Medical Properties Trust got ownership of Pipeline’s four hospitals and two medical office buildings. MPW leased it back to Pipeline for 20 years.
Recently, on October 3, Pipeline Health filed for bankruptcy. This has aggravated challenges for MPW.
While concerns over tenant health could pressure MPW stock, macro weakness further remains a drag.
Last month, Deutsche Bank analyst Derek Johnston cut his price target on Medical Properties Trust stock to $15 from $17, citing macro concerns. However, he maintained his Hold recommendation.
Is MPW a Buy or Sell?
Despite more than a 50% decline in MPW stock (on a year-to-date basis), Wall Street analysts are cautiously optimistic about its prospects. It has received eight Buy and four Hold recommendations for a Moderate Buy consensus rating.
While analysts are cautiously optimistic about MPW stock, hedge funds have lowered their exposure to the stock. TipRanks’ data shows that hedge funds sold 1.5 million Medical Properties Trust stock last quarter. Meanwhile, MPW stock has a Neutral Smart Score of 6 out of 10 on TipRanks.
The Bottom Line on MPW Stock
The challenges from the weak macro environment and issues raised by The Bear Cave report imply that investors should pause and wait for more visibility over the company’s prospects.
