On Friday, CoreCivic (NYSE:CXW) saw its stock rating upgraded from Hold to Buy by Jones Trading, with a new price target set at $28.00. The decision comes in response to the recent political shift, as Republicans are set to take control of the Executive Branch, Senate, and likely the House of Representatives.
The upgrade reflects the anticipated growth opportunities for CoreCivic in the coming years, particularly in light of the new administration's focus on addressing unauthorized migration and bolstering criminal justice enforcement.
CoreCivic's third-quarter results for 2024 surpassed expectations, driven by strong occupancy gains and improved labor cost management. The company has also revised its guidance upward due to the robust occupancy outlook and the anticipation of enhanced profitability towards the end of the year.
The analyst from Jones Trading highlighted that CoreCivic's largest customers, including Immigration and Customs Enforcement (ICE) and the US Marshals Service, are expected to receive increased appropriations following the January inauguration. This is in alignment with President Trump's commitment to tackle immigration issues through executive orders immediately after taking office.
The positive outlook for CoreCivic is further supported by the company's performance in the third quarter of 2024, where it demonstrated operational efficiency and financial growth. With the political landscape shifting and a focus on immigration and criminal justice, CoreCivic is positioned to capitalize on potential government contracts and funding increases.
Investors and market watchers will be keeping a close eye on CoreCivic as the new administration takes office and sets its policies into motion, potentially benefiting the company and its stakeholders. The upgraded rating and raised price target reflect confidence in CoreCivic's future performance in the evolving political and economic environment.
In other recent news, CoreCivic has posted a 2% revenue increase in the third quarter of 2024, reaching $491.6 million, attributed to state revenue growth and improved occupancy rates. The company's normalized funds from operations (FFO) per share also saw a 23% rise to $0.43, despite increased general and administrative costs. These developments are part of recent events that have unfolded within the company.
CoreCivic's third-quarter performance was bolstered by an improved occupancy rate of 75.2%, contributing to a 25% increase in net operating income for the Safety segment. However, the Community segment experienced a decline in net operating income due to a legal settlement. The company anticipates an increase in demand, preparing to activate 18,000 vacant beds.
The company has updated its 2024 financial guidance, expecting an adjusted EPS between $0.69 and $0.75 and normalized FFO per share between $1.59 and $1.65. CoreCivic has also repurchased 4 million shares and maintains a total liquidity of $365 million, with no debt maturities until 2027.
InvestingPro Insights
CoreCivic's recent stock performance aligns with the positive outlook presented in the article. InvestingPro data shows that CXW has experienced significant returns, with a 65.89% increase in the past week and a 73.58% rise over the last month. This surge has brought the stock price to 98.79% of its 52-week high, trading at $22.08 as of the previous close.
The company's financial health appears robust, with revenue of $1.97 billion over the last twelve months and a revenue growth of 5.16%. CoreCivic's profitability is evident, with an EBITDA of $332.3 million and an EBITDA growth of 11.44% over the same period.
InvestingPro Tips highlight that management has been aggressively buying back shares, which often signals confidence in the company's future prospects. Additionally, CoreCivic boasts a perfect Piotroski Score of 9, indicating strong financial stability and potential for future growth.
For investors seeking more comprehensive analysis, InvestingPro offers 15 additional tips for CoreCivic, providing a deeper understanding of the company's financial position and market performance.
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