Why Medical Properties Trust Stock Tumbled on Tuesday

Beleaguered healthcare real estate investment trust (REIT) Medical Properties Trust (NYSE: MPW) called in sick on Tuesday. Following an analyst’s move, investors sold off the company’s stock, albeit not as drastically as in some recent trading sessions. The REIT’s share price fell by more than 2%, a steeper decline than the marginal slump of the S&P 500 index on the day.

Deutsche Bank initiates coverage with a sell

Just after the market closed on Monday, Deutsche Bank‘s Omotayo Okusanya initiated coverage on Medical Properties Trust stock. Unfortunately for the company, this wasn’t positive — Okusanya rates it a sell at a price target of merely $2 per share.

Okusanya’s gloomy take is only the latest bearish analyst move on Medical Properties Trust. Several of the prognosticator’s peers have lowered their price targets on the stock since the beginning of the year. One — KeyBanc’s Austin Wurschmidt — even downgraded his recommendation on it from overweight (buy) to sector weight (hold).

None of this is particularly unexpected or shocking. The REIT is currently attempting to cope with one of its major tenants, Steward Health Care, which has been struggling to meet its rent payment obligations. Earlier this month, Medical Properties Trust published an update on Steward, saying that it was working actively with the company to resolve its issues.

Bears abound on the market

That was hardly reassuring, as a REIT getting deeply involved in a tenant’s finances and operations isn’t an encouraging sign that those problems will be easily solved. Investors have been largely avoiding Medical Properties Trust stock since then. We can expect more bearish takes by analysts on the company going forward unless it and Steward make tangible progress in resolving the situation.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Why Medical Properties Trust Stock Tumbled on Tuesday was originally published by The Motley Fool