Barclays on Private Prisons: 2Q'11 Preview: No Surprises Sequentially; Focus on Industry Pipeline/Award Catalysts
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Price: $32.71 +3.12%
Rating Summary:
7 Buy, 4 Hold, 0 Sell
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Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
7 Buy, 4 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Barclays on Private Prisons: 2Q'11 Preview: No Surprises Sequentially; Focus on Industry Pipeline/Award Catalysts
Barclays analyst says, "Since mid-May, shares of private prison operators GEO and CXW have felt the pressure from (1) California's prisoner realignment plan, and (2) general market pressures related to state budget concerns in a soft economy. Both stocks appear attractive at current levels, but we prefer GEO for its diversification...We believe upcoming awards from FL, AZ, OH and the Feds could serve as catalysts for the shares of CXW and GEO in 2H'11...With respect to California, the simple math around overcrowding statistics keeps us optimistic on the opportunities, although it may take longer than expected to materialize."
The Geo Group (NYSE: GEO) 2Q'11 Preview: We expect revenue ($408M), EBITDA ($77M) and EPS ($0.34) to improve q/q, with contributions from CRN and BI, along with increased utilization. Our $0.34 EPS estimate is on the high end of GEO's $0.32-$0.34 guidance. For FY'11 we have removed $0.12 of CA out-of-state bed potential, but left the $0.12 from its CA CCF's (as explained above). As a result, we lower our PT by $2 to $30.
Corrections Corp of America (NYSE: CXW) 2Q'11 Preview: We expect revenue ($430M), EBITDA ($113M) and EPS ($0.37) to be modestly better q/q, with the increase in USMS populations offsetting ~900-bed CA inmate reduction. Our estimates are consistent with consensus. There is potential EPS upside based on share repurchase activity (our estimates incorporate only the 797K shares repurchased, at $24.34/share, until 05/03/11). (Barclays lowers FY12 EPS from $1.54 to $1.50)
Barclays maintains an Overweight rating on both GEO & CXW
Barclays analyst says, "Since mid-May, shares of private prison operators GEO and CXW have felt the pressure from (1) California's prisoner realignment plan, and (2) general market pressures related to state budget concerns in a soft economy. Both stocks appear attractive at current levels, but we prefer GEO for its diversification...We believe upcoming awards from FL, AZ, OH and the Feds could serve as catalysts for the shares of CXW and GEO in 2H'11...With respect to California, the simple math around overcrowding statistics keeps us optimistic on the opportunities, although it may take longer than expected to materialize."
The Geo Group (NYSE: GEO) 2Q'11 Preview: We expect revenue ($408M), EBITDA ($77M) and EPS ($0.34) to improve q/q, with contributions from CRN and BI, along with increased utilization. Our $0.34 EPS estimate is on the high end of GEO's $0.32-$0.34 guidance. For FY'11 we have removed $0.12 of CA out-of-state bed potential, but left the $0.12 from its CA CCF's (as explained above). As a result, we lower our PT by $2 to $30.
Corrections Corp of America (NYSE: CXW) 2Q'11 Preview: We expect revenue ($430M), EBITDA ($113M) and EPS ($0.37) to be modestly better q/q, with the increase in USMS populations offsetting ~900-bed CA inmate reduction. Our estimates are consistent with consensus. There is potential EPS upside based on share repurchase activity (our estimates incorporate only the 797K shares repurchased, at $24.34/share, until 05/03/11). (Barclays lowers FY12 EPS from $1.54 to $1.50)
Barclays maintains an Overweight rating on both GEO & CXW
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