The Geo Group stock initiated with Buy rating at Texas Capital Securities

Published 30/06/2025, 21:58
The Geo Group stock initiated with Buy rating at Texas Capital Securities

Investing.com - Texas Capital Securities initiated coverage on The Geo Group (NYSE:GEO) with a Buy rating and a price target of $30.00 on Monday. Currently trading at $23.93, GEO has shown remarkable strength with a 65.6% return over the past year, according to InvestingPro data.

The firm cited increased border security funding expectations following last November’s elections as a key catalyst for the private prison and immigrant monitoring company. Texas Capital believes GEO faces significant opportunities to increase revenues and expand margins through immigration enforcement initiatives. InvestingPro analysis suggests the company is currently undervalued, with analysts setting targets ranging from $35 to $50.

The analyst projects GEO’s alternatives to detention monitoring device business could potentially double its current 185,000 units and reach up to 1 million units over the next few years. Currently, less than 1.5% of the estimated 16 million alien population in the United States is monitored.

Texas Capital forecasts GEO could grow its annual revenue from $2.4 billion to $3.0 billion by fiscal year 2026 and $3.2 billion by fiscal year 2027. Similarly, adjusted EBITDA could increase from $463 million to $648 million in FY26 and $700 million by FY27.

The firm expects GEO’s current enterprise value to EBITDA multiple of approximately 7x to re-rate higher to 9x or above, supporting the $30 price target.

In other recent news, The GEO Group, Inc. announced a five-year contract with the U.S. Marshals Service, expected to generate up to $147 million, or approximately $29 million annually. The company also secured a contract modification with U.S. Immigration and Customs Enforcement (ICE) for the D. Ray James Facility in Georgia, projected to add around $66 million in annual revenue. Additionally, the Adelanto ICE Processing Center is set to resume full intake, potentially bringing in approximately $31 million annually. In a strategic move, GEO Group plans to sell its Lawton Correctional Facility to the Oklahoma Department of Corrections for $312 million, a transaction intended to reduce debt and support corporate financial goals. Meanwhile, a disturbance at a GEO-owned immigration detention facility in Newark drew police response, though details remain sparse. These developments reflect GEO Group’s ongoing efforts to manage its portfolio and align with government contracts. Analyst firms have not issued any recent upgrades or downgrades for GEO. The company continues to operate 98 facilities with a capacity of about 77,000 beds globally.

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