Monday, May 09, 2022
CoreCivic, Inc. (CXW)
Headwinds Lead to Miss but Still See Upside
CoreCivic is a diversified, government-solutions company with the scale and experience needed to solve tough government challenges in flexible, cost-effective ways. We provide a broad range of solutions to government partners that serve the public good through high-quality corrections and detention management, a network of residential and non-residential alternatives to incarceration to help address America’s recidivism crisis, and government real estate solutions. We are the nation’s largest owner of partnership correctional, detention and residential reentry facilities, and believe we are the largest private owner of real estate used by government agencies in the United States. We have been a flexible and dependable partner for government for nearly 40 years. Our employees are driven by a deep sense of service, high standards of professionalism and a responsibility to help government better the public good. Learn more at www.corecivic.com.
Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Behind the Miss. There were a number of items with the most significant being the La Palma transition, both the cost of implementing the transition as well as a faster drawn down of the existing ICE population than was anticipated, and a challenging labor market where CoreCivic has implemented above average wage increases.
But Significant Upside Potential. Due to the COVID regulations, CoreCivic’s occupancy levels remain well below historical norms. A return to pre-COVID occupancy levels, or about an additional 8,000 detainees, could add some $40-$50 million to EBITDA. Given the expectations for a border surge once Title 42 is lifted, we do not think this is a stretch….
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.