Medical Properties Trust Analysis: MPW continued to rise after the close after an 18% rise

• MPW shares rose as much as 20% on Wednesday.
• Steward Health Care, the non-paying tenant, agreed to sell its physician network to UnitedHealth.
• Proceeds are expected to be used to pay the Medical Properties Trust.
• Steward owes $50 million starting in 2023 and up to $55 million in deferred rent starting in 2024.

The actions of Medical Properties Trust (MPW) rose 18.6%, reaching a new range high on Wednesday, after a long-unpaid client decided to sell its doctor network to UnitedHealth Group (UNH). This development is expected to allow embattled hospital operator Steward Health Care System to repay all of its past rental bills to Medical Properties Trust, a real estate investment trust (REIT).

MPW stock gained as much as 20% on Wednesday, hitting an intraday high of $4.79, before ending the day slightly lower and failing to close the price gap since its related crash on Jan. 5. After the close, MPW gained another 1%.

The Dow Jones led the market on Wednesday, closing up 1.22%, while the S&P 500 (+0.86%) and NASDAQ Composite (+0.51%) followed.

Medical Properties Trust News

MPW stock began soaring immediately after media reports that troubled tenant Steward Health Care had agreed to sell its doctor network to UnitedHealth Group.

The story was first reported by The Boston Globe, which uncovered public records from UnitedHealth's Optum Care unit with the Massachusetts Health Policy Commission. The price of the operation is not indicated in the documents.

On January 4, Medical Properties management said it had reached an agreement with Steward to recoup its losses. At the time, Steward owed Medical Properties Trust about $50 million in unpaid rent through the end of 2023.

Under the new agreement, Medical Properties provided Steward with a $60 million bridge loan, which Steward would use to finance its turnaround plan. The plan called for Steward to turn to outside investors or sell some of its hospital operations at 33 U.S. facilities to repay Medical Properties by June 30, 2024.

Dallas-based Steward is now likely to repay the $50 million in 2023 rent arrears plus the $55 million or less in 2024 deferred rent, plus the $60 million bridge loan. That bridge loan in January caused MPW shares to plunge 29% in value on January 5. News about UnitedHealth, one of the nation's largest health insurance companies, now rectifies those concerns.

It may not take long for Medical Properties Trust to increase its dividend. The company cut its quarterly dividend from $0.29 per share to $0.15 per share in summer 2023.

Forecast on Medical Properties Trust

Medical Properties Trust stock has seen better days. The hospital REIT was trading below $20 before experiencing problems with two of its largest tenants in 2022, Prospect and Steward. It's been touch-and-go ever since, and its heavily sold shares plummeted as low as $2.92 earlier this year. Even after Wednesday's rally, which was the best trading session in several years for the stock, MPW is still down this year. The stock closed at $4.91 at the end of 2023.

The good news is that on the weekly chart, the MPW Relative Strength Index (RSI) has broken through recent highs and reached a level not seen since August 2023. This means that Momentum or long-term momentum is finally on MPW's side. Beware of short sellers.

MPW Weekly Chart

MPW shares have risen as high as $4.79 on Wednesday, but that price is still below the Jan. 4 low of $4.85 before the REIT plunged in the following session. In this sense, the bulls have not yet claimed their prize. That prize would be to completely close the gap with the $4.85 low. Since markets love to fill price gaps, investors should expect that level to be retested.

Another good sign is that MPW stock has reached a new range high above the $4.69 resistance seen on March 6 and 7. The healthcare REIT is expected to retest the high volume zone around $5.00 once the $4.85 level is broken.

MPW Daily Chart