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Struggling healthcare real estate investment trusts (REITs) Medical Property Trust (MPW -5.25%) He received more body blows on Wednesday. Analysts lowered their price targets for the stock, causing the market to sell off, losing more than 5% of its value. This was a markedly steeper drop than the previous 0.6% drop. S&P500 Index of the day.
Another day, another target price slice
Michael Lewis of Trust Securities cut his price target by a third before the market opened. He now feels that Medical Properties Trust is worth just $4 per share, well down from his previous estimate of $6. The drop in price has not affected his analyst view on the REIT, as he still rates it a Hold.
The reason behind Lewis’ actions was not immediately clear. But he’s not the only forecaster to be bearish on Medical Property Trust. Last week, his colleague Stephen Manaker said: Stifel (SCIENCE FICTION -0.28%) It also enacted a lower price target, although it was not as drastic. He lowered the level by $0.50 to reach the same target of $4 per share. He similarly maintained the reservation recommendation.
In a new research note, Manaker wrote about the REIT’s stated goal to more quickly collect unpaid rent from its No. 1 tenant, Steward Health. He said this was more of a survival move than a step toward recovery, making Medical Properties Trust stock a riskier investment.
Apparently it depends on the tenant
Encouraging stewards to pay is a wise move, but there are some disturbing elements to the Medical Properties Trust’s ambitions for struggling tenants. The company said it has hired a financial advisor to cover unpaid rent and plans to help Steward with its financial restructuring. This suggests that stewards are make-or-break tenants for landlords, and that’s not a good situation for REITs at the moment.
Eric Volkman has no position in any stocks mentioned. The Motley Fool has no position in any stocks mentioned. The Motley Fool has a disclosure policy.
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