Monday, November 09, 2020

CoreCivic (CXW)

Post Call Commentary, Updated Model and Thoughts on Biden Presidency

CoreCivic is a diversified government solutions company with the scale and experience needed to solve tough government challenges in flexible, cost-effective ways. We provide a broad range of solutions to government partners that serve the public good through corrections and detention management, a growing network of residential reentry centers to help address America’s recidivism crisis, and government real estate solutions. We are a publicly traded real estate investment trust and the nation’s largest owner of partnership correctional, detention and residential reentry facilities. We also believe we are the largest private owner of real estate used by U.S. government agencies. The Company has been a flexible and dependable partner for government for more than 35 years. Our employees are driven by a deep sense of service, high standards of professionalism and a responsibility to help government better the public good.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

What Changes Under a Biden Presidency? The proverbial $64,000 question. Although not set in stone, if the Senate remains Republican controlled, we believe any change will be at the margins. As part of the Obama administration, Biden was there as ICE average daily populations experienced a steady increase to the high 30,000 level. A bigger question would be where future detainees would be housed given neither ICE or the USMS owns a meaningful number of beds. If border restrictions are relaxed, crossings may actually increase and, unless policy is changed to not detain anyone, which we think is politically a non-starter, where would the government house them?

Valuable Assets.  One outcome could be the sale or leasing of CoreCivic's properties to the government. On a replacement cost basis, we believe the Company's facilities are worth in excess of $12.75 per CXW share and that is using $100,000 per bed as the replacement cost, well below what the Federal government and States typically spend to build per bed, and discounting the resulting value by 50% ...

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary.  Proper due diligence is required before making any investment decision.