Struggling healthcare real estate investment trust (REIT) Medical Properties Trust (MPW -5.25%) suffered yet another body blow on Wednesday. An analyst trimmed his price target on the stock, inspiring the market to sell out of it to the point where it lost more than 5% of its value. That was a notably steeper fall than the 0.6% slip of the S&P 500 index that day.
Another day, another price-target slice
Before market open, Truist Securities’ Michael Lewis cut his price target by one-third. He now feels that Medical Properties Trust is worth only $4 per share, well down from his preceding $6 estimation. The price chop didn’t affect the analyst’s view of the REIT — he still rates it as a hold.
The reasoning behind Lewis’s move wasn’t immediately clear. However, he’s not the only prognosticator getting more bearish on Medical Properties Trust. Last week his peer Stephen Manaker at Stifel (SF -0.28%) also enacted a price-target cut, albeit a less drastic one. He shaved $0.50 off his level to arrive at that same $4 per-share target. He likewise maintained his hold recommendation.
In a new research note, Manaker wrote about the REIT’s stated goal of more quickly collecting unpaid rent from its No. 1 tenant Steward Health. According to him, this is more an act of survival than a step toward recovery and makes Medical Properties Trust stock a more risky investment.
Apparently dependent on its tenant
Although pushing for Steward to pay up is a sensible move, there are several disquieting elements to Medical Properties Trust’s ambitions with the struggling tenant. It has retained a financial advisor to help it with the unpaid rent and said it’s devising a plan to help Steward right its financial ship. This suggests that Steward is a make-or-break tenant for its landlord, and just now that’s not a good situation to be in for the REIT.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
