Medical Properties Belief Drops To 4-12 months Low, Underperforms Benchmark

Actual property funding belief (REIT) Medical Properties Belief Inc. (NYSE: MPW) not solely dropped to a brand new four-year low, it additionally underperformed the benchmark Actual Property Choose Sector SPDR (NYSE: XLRE) final week on each every day and weekly appears to be like. Birmingham, Alabama-based Medical Properties invests in healthcare amenities.

With a low price-earnings ratio of 5 and now buying and selling at simply 69% of guide worth, some may view it as a attainable worth inventory however with a less-than-special price-to-free money movement of two and extra long-term debt than fairness, that’s unlikely. Wall Avenue analysts are forecasting a 36% drop in earnings subsequent yr.

Traders now might be asking whether or not Medical Properties’ 11% dividend at its present value is sustainable. With the Federal Reserve taking rates of interest greater and with mortgage yields going straight up, REITs like this one could also be discovering declines within the underlying worth of buildings and land, to not point out the elevated prices of financing and refinancing.

Check out the every day value chart for Medical Properties Belief Inc.:

Oct. 21 reveals a decrease low than the sooner October low and on substantial quantity.

Right here’s the every day chart of the benchmark for REITs, the Actual Property Choose Sector SPDR Fund:

The fund that represents a big group of REITs closed up by 0.7% on Oct. 21.

It’s clear that Medical Properties is underperforming different REITs.

Right here’s the weekly value chart for the corporate:

This REIT is down for the week ending Oct. 21 by 5.89%

To check, right here’s the REIT benchmark fund’s weekly chart:

The Actual Property Choose Sector SPDR fund closed the week ending Oct. 21 up by 2.67%.

That’s fairly a distinction.

It in all probability doesn’t assist that Medical Properties Belief has been downgraded by 4 main funding companies this yr, starting in March. That’s when Financial institution of America Securities lowered its ranking on the REIT from purchase to impartial with a value goal of $21. In April, Jefferies Group decreased its ranking on the corporate from purchase to carry with a value goal discount from $25 to $21.

Story continues

In June, JP Morgan Chase & Co. downgraded Medical Properties Belief from obese to impartial. It lowered its value goal from $24 to $18. In July, Credit score Suisse Group AG took its ranking on the REIT from outperform to impartial with a value goal discount from $23 to $17.

On reflection, these analysts appear to have achieved their homework.

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Charts: Courtesy of StockCharts

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