Things aren’t looking good for healthcare stock Medical Properties Trust (NYSE:MPW), as analysts turn on the stock and circumstances offer little help. Investors aren’t happy but are, for the most part, holding position, as Medical Properties Trust stock lost only fractionally in Thursday afternoon’s trading. Indeed, things aren’t looking good, and Mizuho Securities analyst Vikram Malhotra offered up a laundry list of individual troubles for the medical real estate holder.
Problem one: recent asset sales. It brought in cash, certainly, but the short-term will likely see earnings fall accordingly. Problem two: the differences between asset sales yield and debt costs. Debt costs, as it turned out, are significantly higher than what the asset sales yields were, coming in at -3.4% and -6.5%, respectively. Problem three, and perhaps worst, there will likely be a longer runway time until Medical Properties Trust can recover from its debt with cost-cutting measures and further asset sales.
All fairly bad news in their own right, but there’s more trouble ahead. The Department of Justice recently took aim at Medical Properties Trust over issues of “fraudulent conveyance.” While these matters took place back during the Bush Administration, they may still represent a loss of face, or potentially even some kind of legal trouble, in the months ahead. There are some high points involved—even Malhotra notes there are several “potential catalysts” at play for improvement—but there is no shortage of trouble waiting in the wings.
Indeed, analysts are almost perfectly split about Medical Properties Trust. With three Buy ratings, two Holds, and three Sells, Medical Properties Trust stock has a consensus Hold rating. Further, with an average price target of $9, Medical Properties Trust stock offers an upside potential of 23.88%.