Prison operator CoreCivic dives as Texas immigrant detention center to shutter

Corecivic

11/06/2024 13:44

(Updates with analyst commentary)
    ** CoreCivic Inc's  CXW.N  shares dive 23% premarket to
$11.40, lowest since Oct, as U.S. Immigration and Customs
Enforcement to close Texas detention center
    ** ICE in memo to U.S. lawmakers on Mon said it would
shutter South Texas Family Residential Center (STFRC) in Dilley,
freeing up money to expand detention bed space elsewhere
    ** CoreCivic, which held around 1,800 people as of June 6,
per ICE records, said late Mon it received notice to terminate
service agreement effective in 60 days
    ** CoreCivic said for 2023 and qtr ended in Mar, total revs
at STFRC were $156.6 mln and $39.3 mln, respectively
    ** Given termination notice and cost uncertainties
associated with closure, co suspends 2024 financial guidance.
But it estimates annualized EPS reduction of about $0.38-$0.41
    ** Wedbush downgrades CXW to "neutral" from "outperform",
lowers PT by $5 to $14
    ** Moving to sidelines to reassess co's ongoing earnings
power "following the unexpected loss of this significant
contract," Wedbush says in note to clients
    ** Through Mon, CXW up ~2% YTD and up ~60% over the past 12
months
    ** Also, shares of Target Hospitality  TH.O  slumping >30%
before the bell on news of facility's closing

 (Lance Tupper is a Reuters market analyst. The views expressed
are his own)
 ((lance.tupper@thomsonreuters.com
lance.tupper@tr.com 1-646-279-6380))