By Medical Properties Trust stock continued its strong downward trend, reaching its lowest level since February 2024. MPT has slipped by 53% from the year-to-date high, even as the company has made efforts to extend its maturities. Over time, its market capitalization has slumped from over $15 billion to $1.68 billion, and technicals suggest that it has more downside.
Medical Properties Trust stock has formed risky technicals
Technical analysis suggests that the MPT stock has more downside to go in the near term. It dropped below the important support level of $3.0, its lowest level in January last year, and the lower side of the inverted cup-and-handle pattern. Inverted C&H is one of the most accurate continuation signs in technical analysis.
The stock has remained below the 50-week Exponential Moving Average (EMA). It is also along the lower side of the Bollinger Bands, while the Average Directional Index (ADX) has jumped to 33, its highest point since March, a sign that the downward trend is gaining momentum.
These technicals suggest that the stock has more downside to go, potentially to the psychological level of $2. A drop below that price will point to more downside, potentially to $2.50.
MPT stock chart | Source: TradingView
Medical Properties Trust is facing major challenges
MPT stock is facing some major challenges. One of them is the fact that interest rates and bond yields are rising. The Federal Reserve hiked interest rates by 0.25% in the last meeting, and analysts expect the bank to hike again later this year. US bond yields are hovering near their highest levels in years.
REITs tend to underperform the market whenever the Fed is hiking interest rates. This partly explains why investors have continued shorting the company. Its short interest jumped to 24%, making it one of the most heavily shorted companies in the US.
Medical Properties has worked hard to improve its business and boost its balance sheet. In September, it completed the sale of two hospitals in a $371 million deal. Before that, in August, it announced a $2.4 billion private refinancing transaction to extend its debt maturities to 2032.
The challenge, however, is that the refinancing was quite expensive, as the new Senior Secured Notes have a 9.25% rate. It used the new funds to pay its notes due 2026 and some of those due in 2027. The company also received $100 million in cash after the IPO of Infracore SA.
Still, analysts have remained highly skeptical about Medical Properties Trust, with Wells Fargo slashing its target from $5 to $3.80. Royal Bank of Canada (RBC) also slashed its target from $5 to $4.50.
These analysts believe that, while the refinancing is good, the company faces other challenges. Years after Steward and Prospect filed for bankruptcy, HSA and NOR, its other top tenants, are struggling to pay their rent. HSA is paying about 75% of its contractual rent. While NOR is paying, there is a risk that its crisis will resume.
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