BofA upgrades Medical Properties to Buy, cuts Omega Healthcare, Sabra

November 16, 2022 : Bank of America analyst Joshua Dennerlein made rating transitions for 3 healthcare REITs on Monday to reflect revised risk-reward profiles for the year ahead. That includes advancing Medical Properties Trust (NYSE:MPW) to Buy from Neutral, devaluing Omega Healthcare Investors (NYSE:OHI) to Neutral from Buy, and missing Sabra Health Care (NASDAQ:SBRA) to Underperform from Neutral.

In the case of Medical Properties (MPW), specifically, Dennerlein pointed out some forward-looking favorable catalysts, including “(1) we anticipate the Steward ABL to be perpetually extended in December, (2) management has indicated to a multi-party transaction involving Prospect,” he noted in a note.

In addition, “(3) tenants should begin to see improving fundamentals from payor rate increase, improving labor markets and reducing inflation, and (4) a pivot to an additional dovish Fed is a favorable for this high producing REIT.”

Similarly though, Omega (OHI) and Sabra (SBRA), both of which subsidize in professional nursing facilities, could be seen at a disadvantage given the possible termination of the Federal public health emergency on January 11, 2023, the note stated.

Seeking Alpha reporter Steven Fiorillio views Omega (OHI) as a Buy, calling it an “8% producing dividend machine.” Fellow SA contributor Jussi Askola explains Medical Properties with a Strong Buy rating following the hospital REITs third-quarter derivatives.