Colliers effects upgraded Medical Properties Trust, Inc. (NYSE:MPW) gave the stock a Buy rating and announced a $6.5 price target.
Also, Truist effects Analyst Michael Lewis raised his price target to $6 from $5, but maintained a Hold rating.
On Wednesday, the medical REIT announced a global settlement with tenant Steward Healthcare Systemits secured lenders and the Unsecured Creditors Committee.
The settlement covers 23 hospitals previously managed by Steward, while 15 hospitals in Arizona, Florida, Louisiana, Ohio and Texas have already been leased to new tenants.
Medical Properties Trust expects to receive annual cash rent payments of approximately $160 million from the new leases, based on a $2 billion lease base, upon stabilization in the fourth quarter of 2026.
The analyst writes that they are adjusting FFO estimates and price target and affirming a Hold rating due to expected earnings dilution from refinancing activities in the coming years.
Medical Properties Trust agreed to sell three Space Coast hospitals, transferring a significant portion of the proceeds to Steward. Lewis says those hospitals, combined with the nine in Massachusetts where Medical Properties Trust won’t recover anything, suggest a 75% recovery rate on the $3.2 billion asset value reported in Medical Properties Trust’s first-quarter supplemental package.
That estimate assumes Medical Properties Trust will recoup $300 million from the six closed hospitals, $100 million from the two hospitals under construction and $2 billion from the 15 hospitals that have been transferred, the analyst said.
Lewis writes that while this is consistent with their previous models, there is still some risk due to uncertainties around the value of non-operating assets and the success rates of new operators.
The analyst revised its 2025 FFO estimate to $1.01 per share from $1.02 per share, still above the $0.92 consensus. The estimates indicate a 39.9% year-over-year decline in normalized FFO per share in 2024, followed by 6.0% growth in 2025.
The analyst predicts a decline in FFO per share in each subsequent year through 2029 as a result of dilutive debt refinancing.
Also read: European Central Bank cuts key interest rates as inflation cools
Price promotion: MPW shares rose 12.4% to $6.295 at last check on Friday.
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Latest reviews for MPW
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Date |
Sturdy |
Action |
By |
Nasty |
|---|---|---|---|---|
|
March 2022 |
B or A effects |
Depreciations |
Buy |
Neutral |
|
February 2022 |
Credit Switzerland |
Maintains |
Surpass |
|
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February 2022 |
Credit Switzerland |
Initiates coverage on |
Surpass |
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This article Medical Properties Trust faces risk of profit dilution despite new leases, analyst says originally appeared on Benzinga.com
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