Wednesday, March 05, 2025
The GEO Group, Inc. (NYSE: GEO) is a leading diversified government service provider, specializing in design, financing, development, and support services for secure facilities, processing centers, and community reentry centers in the United States, Australia, South Africa, and the United Kingdom. GEO’s diversified services include enhanced in-custody rehabilitation and post-release support through the award-winning GEO Continuum of Care®, secure transportation, electronic monitoring, community-based programs, and correctional health and mental health care. GEO’s worldwide operations include the ownership and/or delivery of support services for 103 facilities totaling approximately 83,000 beds, including idle facilities and projects under development, with a workforce of up to approximately 18,000 employees.
Joe Gomes, CFA, Managing Director, Equity Research Analyst, Generalist , 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.
Upgrading to Outperform. We are upgrading GEO shares to Outperform with a $32 near-term price target. We believe there is substantial opportunity just in filling existing beds under current contracts, with the opening of currently idle facilities, new facilities, and expansion of the ISAP program providing additional upside.
Opportunity. GEO has an additional 17,000 beds to provide for ICE detention requirements, which would increase GEO’s overall bed capacity for ICE to about 32,000 beds. The incremental 17,000 beds includes approximately 9,400 beds in current idle facilities that will be reconfigured for detention use and approximately 7,700 incremental beds available at existing GEO serviced ICE and U.S. Marshal’s facilities under contract. Management estimates the utilization of these additional 17,000 beds could generate between $500 million and $600 million in incremental annualized revenues, with margins consistent with secure services owned facilities which average 25% to 30%.
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*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.