Border security policies prompted a 42-percent annual increase in Immigration and Customs Enforcement arrests over the first nine months of 2017, and Height Securities expects no slowdown.
“The Trump administration's tough-on-immigration policies are unlikely to fade anytime soon, meaning investors should expect continued strict enforcement, more arrests by ICE and the need to accommodate a growing number of arrested individuals,” analyst Stefanie Miller said in a Tuesday note.
That bodes well for The GEO Group Inc GEO and Corecivic Inc CXW, private prisons contracted by the government to house ICE detainees.
“ICE represents an important and growing portion of CoreCivic’s revenue,” Miller said.
Corecivic’s ICE-related revenue increased from 13 percent to 28 percent of total revenue between 2014 and 2016, with payments rising 142 percent. ICE contracts comprised 24 percent of GEO Group’s third-quarter revenue.
The government seems to anticipate accelerated arrests too. ICE issued a request in the fall for facility space in the Midwest and Southwest, and the Department of Justice recently called for an increase in private prison populations.
“We expect the administration's focus on tighter and broader border security measures will endure for the duration of [President Donald] Trump's term in office,” Miller said.
Notably, the hard-line policies juxtapose with federal rhetoric emphasizing social rehabilitation and anti-recidivism programs.
“[T]his year we will embark on reforming our prisons to help former inmates who have served their time get a second chance,” Trump said during the State of the Union address.
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