Shares of healthcare-focused real estate investment trust (REIT) Medical Properties (NYSE:MPW) plummeted by nearly 17% in today’s early trading session after its largest tenant, Steward Health, filed for Chapter 11 bankruptcy. MPW is scheduled to report its first-quarter numbers later this week.
Medical Properties’ Tenant Troubles
Steward Health is the largest physician-led hospital operator in the U.S. Its Chapter 11 bankruptcy comes amid ongoing challenges, both operational and financial, in recent times. In January, Steward enlisted restructuring advisors to bolster its liquidity. In March, the company agreed to sell its physician network to UnitedHealth’s (NYSE:UNH) Optum Care. However, the deal has been experiencing delays.
Troubles Are Weighing on Landlord MPW
The troubles at Steward have heavily weighed on its landlord, MPW, in recent times. Today’s 17% decline in MPW’s stock price comes on top of a nearly 41% drop in its share price over the past year. Currently, Steward is finalizing the terms for a debtor-in-possession financing from MPW, which will provide $75 million in initial funding. Meeting certain conditions could also unlock an additional $225 million in funding. Steward anticipates that its operations will continue without interruption during the Chapter 11 process.
MPW’s Upcoming Results
Meanwhile, Steward’s bankruptcy comes only days before MPW’s first-quarter results on May 9. Analysts expect the company to post an EPS of $0.09 on $270.1 million in revenue for the quarter. In the comparable year-ago period, MPW’s EPS of $0.05 had lagged expectations by a wide margin of $0.17.
What Is the Target Price for MPW?
Overall, the Street has a Hold consensus rating on Medical Properties, alongside an average MPW price target of $4.20. The stock is already trading at a lower price level in the premarket session today.
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