Buy, Sell or Hold Medical Properties? Key Tips Ahead of Q3 Earnings

Core Viewpoint - Medical Properties Trust, Inc. (MPW) is expected to report third-quarter 2024 earnings on November 7, with a consensus estimate for normalized funds from operations (FFO) per share at 20 cents, reflecting a significant year-over-year decline of 47.4% [1][2]. Financial Performance - The Zacks Consensus Estimate for third-quarter revenues is $241.2 million, indicating a year-over-year decrease of 21.3% [2]. - For the current year, the normalized FFO per share is estimated at 85 cents, down 46.5% year-over-year, while 2024 revenues are projected to rise by 15.8% to $1.01 billion [3]. - Over the last four quarters, MPW has beaten the Zacks Consensus Estimate three times, with an average surprise of 13.2% [3]. Earnings Prediction - The company's Earnings ESP is currently at 0.00%, and it holds a Zacks Rank of 5 (Strong Sell), indicating a lack of predictive power for a positive surprise in FFO this season [4][5]. Revenue Influencers - A decline in rent billed is anticipated to negatively impact quarterly revenues, with estimates at $167.1 million, down from $183.8 million in the previous quarter and $229.3 million year-over-year [6]. - Income from financing leases is expected to fall to $18.4 million, compared to $27.6 million in the prior quarter and $26.1 million in the year-ago quarter [6]. - High interest expenses and exposure to troubled operators are also expected to adversely affect performance [7]. Strategic Moves - MPW employs a disciplined capital-recycling strategy, recently selling the Arizona General Hospital and seven emergency departments for $160 million, resulting in an $85 million gain on real estate [8]. - The company has engaged in liquidity transactions exceeding $2.5 billion to strengthen its balance sheet [9]. Market Performance - MPW shares have increased by 0.6% over the past three months, underperforming compared to the Zacks REIT and Equity Trust - Other industry's growth of 4.9% and the S&P 500's rise of 11.2% [10]. - The stock is trading at a forward 12-month price-to-FFO of 5.77X, significantly below the industry average of 16.40X [11]. Company Challenges - Allegations from short-sellers were investigated, revealing no misconduct, but concerns remain regarding exposure to troubled operators and high interest expenses [12][13]. - The current stock price may reflect underlying issues rather than a clear investment opportunity, suggesting caution for new investors [13][14].