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RBC Capital lowered its estimates for Medical Properties Trust (NYSE:MPW) as it takes a more conservative stance following its “disappointing” Q2 earnings report, and added a Speculative Risk qualifier to its Outperform rating.
Shares -3.4% in morning trade.
Analyst Michael Carroll highlighted more uncertainty regarding its largest tenant Steward Health Care. “Steward continues to manage through a tight liquidity position requiring MPW to invest $140M in a new $560M ABL facility.”
Carroll said collections need to improve to help fix liquidity issues. “We believe management will need to be more proactive in reducing leverage and improving liquidity via dispositions and a near-term dividend cut is likely needed,” he said. “We will be incrementally more concerned if these don’t occur.”
RBC’s outlook assumes a $60M rent cut in Q1 2024 (reflecting ~20% of Steward’s rent); the Prospect CT sale being pushed to Q4 2023 (from Q2); MPW does not recognize any revenue from the Prospect PA mortgage; and a 35% dividend cut to $0.75/share.
RBC cut its 2023/2024/2025 AFFO per share estimates for MPW to $1.14/$1.16/$1.14 from $1.21/$1.31/$1.31, compared to consensus of $1.54/$1.52/$1.48.
Price target was cut to $10 from $12, implying 23.8% potential upside to MPW’s last close.
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Image and article originally from seekingalpha.com. Read the original article here.