Medical Properties Stock Gains 14% in 6 Months: Will the Trend Last?
This healthcare real estate investment trust (REIT), carrying a Zacks Rank #3 (Hold), is engaged in acquiring and developing net-leased healthcare facilities. Its properties consist of general acute care hospitals, behavioral health facilities, post-acute care facilities, freestanding ER/urgent care facilities and other assets.
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Let us decipher the possible factors behind the surge in the stock price.
The senior citizens' population is expected to rise in the years ahead. As a result, the national healthcare expenditure by senior citizens, who constitute a major customer base of healthcare services and incur higher healthcare expenditures than the average population, will likely increase in the upcoming period.
Moreover, the healthcare sector is relatively immune to the macroeconomic problems faced by office, retail and apartment companies and offers stability to the company amid volatility in the market. This is because even amid tough economic conditions, consumers need to spend on healthcare services while curtailing discretionary purchases.
Medical Properties leases facilities to healthcare operating companies. These facilities generally have initial fixed lease terms of at least 15 years, with most including five-year renewal options. More than 99% of its leases provide annual rent escalations based on increases in the Consumer Price Index.
Strategic sell-outs provide the company with the dry powder to reinvest in opportunistic developments and redevelopments. In the first quarter of 2025, MPT sold two facilities and an ancillary facility for approximately $20 million, resulting in a gain on real estate of $8.1 million.
Medical Properties has been making efforts to enhance its liquidity position and financial strength. As of May 7, 2025, the company had approximately $1.3 billion of liquidity. After the February 2025 refinancing transactions, the company has no debt maturities coming due in the next twelve months. Its access to diverse capital sources through capital recycling and internal cash flow provides ample financial flexibility and is likely to support its growth endeavors.
With the factors mentioned above, the positive trend in the stock is expected to continue in the near term.
Operator concentration risk, potential tenant bankruptcies and substantial debt burden remain concerns for Medical Properties. Any further reduction in dividend payouts will likely decrease shareholder value.
Some better-ranked stocks from the broader REIT sector include SBA Communications SBAC and Omega Healthcare Investors OHI, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for SBAC's 2025 FFO per share has moved 3 cents northward to $12.74 over the past two months.
The Zacks Consensus Estimate for OHI's 2025 FFO per share has moved a cent northward to $3.03 over the past week.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.
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SBA Communications Corporation (SBAC) : Free Stock Analysis Report
Omega Healthcare Investors, Inc. (OHI) : Free Stock Analysis Report
Medical Properties Trust, Inc. (MPW) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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