CoreCivic received a key upgrade on forecasts of increased needs for Immigration and Customs Enforcement (ICE) detention beds under incoming President Donald Trump. The prison stock rose on Tuesday but trimmed gains.
Analysts at Wedbush Securities upgraded CoreCivic stock to outperform from neutral. They also hiked their price target to $30, up from $19. That suggests more upside for the operator of private prisons and detention centers, whose shares already rallied more than 70% in the fourth quarter amid robust earnings and Trump's U.S. election win.
Illegal Immigration Crackdown, ICE Detention Beds
Wedbush analyst Jay McCanless told investors that recent comments from the Trump transition team suggest the need for ICE beds could be greater than expected. Further, this need for detention beds could reactivate CoreCivic's lost South Texas contract, McCanless said in a research note seen by TheFly.com.
As a result, the analyst said, a potential earnings uptick could quicken the pace of CoreCivic share repurchases, which were halted following the loss of that contract.
Despite CoreCivic's big run since the Nov. 5 election, the potential acceleration of EBITDA (earnings before interest, taxes, depreciation, and amortization) growth should warrant a higher multiple, McCanless argued.
In June, CoreCivic said it was notified by ICE that an agreement for services at the South Texas Family Residential Center would be terminated in 60 days. The facility was initially opened during the Obama-Biden administration to deal with high family volumes arriving at the southern border.
Donald Trump On 'Very Tough' Mass Deportations
In a wide-ranging weekend interview with NBC News' "Meet the Press," Trump affirmed plans to deport millions of illegal immigrants and try to end birthright citizenship.
Immigration was a cornerstone of Trump's presidential campaign. He vowed on Sunday to carry out mass deportation of undocumented migrants.
First will be convicted criminals, he said. Trump added: "Well, I think you have to do it, and it's a hard — it's a very tough thing to do. It's — but you have to have, you know, you have rules, regulations, laws. They came in illegally."
The expense and logistics of deporting millions of people haven't given him pause.
"You have no choice," Trump said. "First of all, they're costing us a fortune (housed in detention facilities). But we're starting with the criminals, and we've got to do it. And then we're starting with the others, and we're going to see how it goes."
Asked about families with mixed immigration status, where some are in the U.S. legally and some illegally, Trump said: "I don't want to be breaking up families, so the only way you don't break up the family is you keep them together and you have to send them all back."
But he signaled a possible exception for "Dreamers" — people who were brought to the U.S. illegally as children and have lived here for years. He suggested support for a legislative solution that would allow them to remain in the country.
CoreCivic Stock Offers Early Entry, Geo Group
Shares of CoreCivic rose 1.5% to 22.25 on the stock market today, paring gains. CoreCivic cleared an aggressive trendline buy point around 22.50 intraday.
The prison stock seems to be forming a new cup-shaped base, but it's a little too early to tell. It sits above all the shorter- and longer-term moving averages after a soaring breakout past 16.54 in November.
Geo Group turned lower on Tuesday. Geo stock has more than doubled in the final quarter of 2024, vaulting 121%.
Prison Stocks Rallied Earlier on Trump Win
In 2016, private prison stocks soared after Trump's first presidential election win.
Geo Group, which owns, leases and manages correctional facilities, advanced 107% in the three months after the election. CoreCivic stock rose 149% over the same period.
Trump vowed to crack down on crime and illegal immigration, and private prisons and detention centers were seemingly one answer to overcrowding.
But Geo stock and CoreCivic stock languished for much of this past year before breaking out to highs last month after Trump's second U.S. election win.
Please follow Aparna Narayanan on X @IBD_Aparna for more coverage.
