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Height: Congressional Budget Deal A Boon For Private Prisons

Height: Congressional Budget Deal A Boon For Private Prisons
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A little over two years ago, the very existence of Corecivic Inc (NYSE: CXW) and The GEO Group Inc (NYSE: GEO) appeared at risk.

Now, under the friendlier Trump administration, the private prison operators are forecasted not only to survive but to thrive, according to Height Securities. 

Congress is expected to pass a yearlong appropriations bill March 23, and the House and Senate proposals outline different, pro-prison Department of Homeland Security budgets. In the worse-case scenario for the private prison operators, the Senate secures funding on par with 2017 rates. In the best case, the House provides a 12-percent year-over-year increase for an additional 4,676 detention beds.

“However, the top-line funding to which lawmakers agreed as part of the two-year budget deal includes spending $63 billion above the sequestration caps for domestic levels in fiscal 2018,” Height Securities analyst Stefanie Miller said in a Friday note. “That is an encouraging data point since the additional funds give lawmakers flexibility to allocate money for more beds if they choose to do so."

The appropriations broken down for Immigration and Customs Enforcement, which contracts the prisons, will lend clarity on potential federal opportunities that have not yet materialized.

Height noted Tuesday that the contractors should see a revenue swell from rising ICE arrests.

At the time of publication, The GEO Group was trading up 1.53 percent at $20.28, while Corecivic traded up slightly at $21.49.

Related Links:

CoreCivic Responds To Claims Of Gang Violence, Staffing Vacancies: 'We Still Have Work To Do'

4 Reasons Private Prisons Could Still Prosper, With Or Without Jeff Sessions As AG

Latest Ratings for CXW

Feb 2018Deutsche BankMaintainsBuyBuy
Aug 2017Canaccord GenuityMaintainsBuy
Aug 2017Deutsche BankMaintainsBuy

View More Analyst Ratings for CXW
View the Latest Analyst Ratings

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