MPT
Medical Properties Trust, Inc.
$4.15
Real Estate Investment Trust
85%
P/FFO × Healthcare REIT Multiple
Strong
·
Conviction
Undervalued
Trading 53.2% below fair value
You pay
$4.15
Bear
$7.05
Fair
$8.86
Bull
$10.68
Bear
$7.05
+69.8%
$0.39 FFO × 18x
Fair
$8.86
+113.6%
$0.39 FFO × 23x
Bull
$10.68
+157.3%
$0.39 FFO × 28x
Key Value Driver
FFO/share ($0.39) × healthcare P/FFO multiple
Implied Market Multiple
10.8x
Summary
Our base-case estimate uses P/FFO × Healthcare REIT Multiple. We then blend that result with the average analyst price target of $11.27 from 28 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $8.86 per share.
Warnings
Standard profit figures are misleading for real estate companies — large non-cash accounting charges make profits look artificially low. Dividend yield and funds from operations are better measures.
Dividend yield of 8.4% is unusually high — make sure the company generates enough cash to keep paying it.
Wall Street's average price target is $11.27 (from 28 analysts). Our estimate is 28% below the consensus -- consider that gap carefully.
Key Risks
- P/E and EV/EBITDA are structurally wrong for REITs — use P/FFO and NAV
- Interest rate sensitivity: REIT multiples compress when rates rise
- FFO approximation (NI + D&A) may include gains on property sales — verify