MPW - Medical Properties Trust: The Market Paints A Bright Future - Ignore

2024-06-26 12:11:05 ET

Summary

• Based on the totality of all factors, I think my downgrade in March 2024 was a great decision.
• Medical Properties Trust keeps reporting a significant financial deterioration amid a rising debt-to-equity ratio. I see a slow reaction from Wall Street analysts - it heightens the risks of future earnings misses.
• With a cheap valuation and short interest of 34.35%, I'd definitely not short MPW at the moment.
• If you're buying MPW stock for the expected dividend, it's probably not a good idea.
• Despite the potential for turnaround post-restructuring, lack of confidence in management and dividend risks lead to a "Hold" rating.

My Coverage History And Updated Thesis

I initiated coverage on Medical Properties Trust ( MPW ) stock on January 20, 2024 , with a "Strong Buy" rating, saying that investors need to be greedy while others were fearful at the time. The main argument I wrote was that MPW's undervaluation combined with its high short interest and solid support from the 2009 crisis made the stock attractive to medium-term dip buyers. The stock was up 23.3% after 3 months, and news hit the market that seemed to me a sufficient red flag to downgrade MPW to "Hold" - the lack of an auditor's consent filing....

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