It's been a good week for Medical Properties Trust, Inc. (NYSE:MPW) shareholders, because the company has just released its latest full-year results, and the shares gained 5.1% to US$23.28. Medical Properties Trust reported US$870m in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$0.87 beat expectations, being 5.5% higher than what analysts expected. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.
Taking into account the latest results, the current consensus from Medical Properties Trust's seven analysts is for revenues of US$1.27b in 2020, which would reflect a major 45% increase on its sales over the past 12 months. Statutory earnings per share are expected to bounce 41% to US$1.23. Yet prior to the latest earnings, analysts had been forecasting revenues of US$1.27b and earnings per share (EPS) of US$1.09 in 2020. There was no real change to the revenue estimates, but analysts do seem more bullish on earnings, given the solid gain to earnings per share expectations following these results.
There's been no major changes to the consensus price target of US$23.79, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Medical Properties Trust at US$27.00 per share, while the most bearish prices it at US$21.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.
In addition, we can look to Medical Properties Trust's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. It's clear from the latest estimates that Medical Properties Trust's rate of growth is expected to accelerate meaningfully, with forecast 45% revenue growth noticeably faster than its historical growth of 18%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 5.1% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Medical Properties Trust is expected to grow much faster than its market.
The Bottom Line
The biggest takeaway for us from these new estimates is that the consensus upgraded its earnings per share estimates, showing a clear improvement in sentiment around Medical Properties Trust's earnings potential next year. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Medical Properties Trust analysts - going out to 2023, and you can see them free on our platform here.
It might also be worth considering whether Medical Properties Trust's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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