Shares of Medical Properties Trust (MPW +2.28%) were surging 12.5% higher as of 11:04 a.m. ET on Tuesday. The nice gain came after the U.S. Bureau of Labor Statistics (BLS) reported inflation numbers for October 2023.
BLS stated that the Consumer Price Index for All Urban Consumers (CPI-U) was up 3.2% year over year but flat from September to October. This was better than what Wall Street expected. Also, core CPI rose by only 0.2% year over year. This marked the smallest increase since September 2021.
NYSE: MPW
Key Data Points
How do better-than-expected inflation numbers help Medical Properties Trust?
Medical Properties Trust investors cheered the latest inflation numbers for one key reason: The better-than-expected results improve the odds that the Federal Reserve won't raise interest rates again.
Why is this such a big deal? Medical Properties Trust is a real estate investment trust (REIT). Like most REITs, it has taken on a significant level of debt to fund the purchases of additional properties. If interest rates remain high, it will be more costly for Medical Properties Trust to refinance its maturing debt over the next few years. The prospect of steady or even lower rates is music to REIT investors' ears.
Is Medical Properties Trust stock a buy on the surge?
Despite today's positive inflation news, Medical Properties Trust remains a highly volatile stock that risk-averse investors will probably want to avoid. The company continues to face several challenges, notably including financial difficulties for some of its hospital operator tenants.
However, I think that aggressive investors willing to take on a high level of risk might want to consider Medical Properties Trust. Its dividend yield of over 13% could be alluring. More importantly, the worst could be over for the embattled REIT.
