Medical Properties Trust (NYSE: MPW) stock price had a difficult performance in 2023 as the company faced numerous headwinds. The stock plunged to 3.93 in November down from $12.4 in February. This retreat has brought its total market cap to $2.94 billion and its enterprise value to a whopping $12.76 billion.

Medical Properties Trust is one of the biggest owners of hospital buildings in the US. It has 441 properties and over 44k beds in the US and other countries. In theory, this is one of the best REIT industries, especially in the US where the population and aging are growing. 

However, MPW’s business is not doing well as concerns about its substantial debt remain. The company’s key customer, Prospect, is also going through a difficult period and some analysts believe that it could go under this year.

Medical Properties Trust faces numerous challenges, making it difficult to recommend it as a viable investment. First, there is still room for another dividend cut because of its huge debt. 

MPW has over $10.16 billion in total debt and just $340 million in cash. This is a huge number, especially in a high-interest environment. Most importantly, it has substantial maturities in the coming years. It has $1.35 billion maturing in 2025, $2.99 billion in 2026, and $1.6 billion in 2027.

Therefore, the company is at an elevated risk ahead of these maturities. This explains why S&P Global downgraded the company to B+ from BB. In addition, its operations are not doing well as Steward, one of its clients, has delayed paying its rents for several months. Steward accounts for almost 20% of its total revenue.

There are other risks. For one, Medical Properties Trust is banking on asset sales to deal with its debt. The challenge with this approach is that it could be forced to sell some of its assets at a lower valuation. Also, there are signs that the transactions markets will be under pressure in this high-interest rate environment.

The other risk is that selling these properties is not an easy task, with most of the deals coming under regulatory scrutiny. Some of these deals have been delayed while others have been stopped. Medical Properties Trust is also facing slow revenue and profitability growth, which is another big risk.

MPW chart by TradingView

MPW stock price looks cheap. Besides, it has crashed by over 75% from its all-time high and is now hovering at its lowest level since October 2012. Still, I believe that this could be a value trap because of the challenges the company is facing. 

On the monthly chart, we see that the MPW share price remains below all moving averages. It has also formed a bearish flag pattern, which is one of the most worrying signs in the market.

Therefore, the outlook for the shares is bearish, with the initial target being last year’s low of $3.92. A break below that level will see it crash to the key support at $3.50.

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