Private prison stocks tumble amid guidance cuts – despite Trump-era boom

Shares of GEO Group, a small-cap operator of migrant detention centers, fell more than 8% yesterday, November 6, while competitor CoreCivic slumped almost 10%. Both companies lowered their 2025 forecasts, despite having described the outlook earlier this year as “unprecedented” amid rising U.S. demand for detention capacity under the Trump administration.

Shares of the two private detention operators fell sharply on the New York Stock Exchange yesterday: GEO Group dropped 8.3% to $15.40 per share; and CoreCivic sank nearly 10% to $16.80 per share.

Investors reacted to weaker full-year forecasts from both companies.

GEO Group now expects 2025 net income per share of $1.81-1.85, down from its previous projection of $1.99-2.09, issued just three months ago. The company nevertheless reported strong third-quarter results and a record $460 million in new contracts with U.S. Immigration and Customs Enforcement (ICE), according to Simply Wall St. Quarterly revenue rose 13% year over year to $682.3 million, while net income surged more than sixfold to $173.94 million.

"While the recent unprecedented surge in new or expanded contracts, resulting in more than US$460 million in annualized revenue, strengthens the company's near-term revenue base, updated Q4 and full-year guidance falling short of analyst estimates brings some caution to the biggest short-term catalyst: successful absorption and ramp-up of these contracts," Simply Wall St argues. 

CoreCivic also trimmed its 2025 earnings guidance, forecasting $0.99-1.05 per share, down from $1.08-1.15. The company said start-up expenses and capital investments tied to new facilities would temporarily weigh on profit margins. In the third quarter, revenue rose 18.1% year over year to $580.4 million, while net income increased 24.7% to $26.3 million.

Private prison operators first drew investors’ attention in the summer of 2024 as Trump’s election prospects improved. Analysts at Wedbush wrote at the time that GEO Group and CoreCivic stood to benefit from his tough stance on illegal immigration.

According to CoreCivic’s estimates after Trump's election, ICE may soon require between 60,000 and 110,000 incremental detention beds, as the analytical firm Zacks SCR previously reported, citing the recent passage of the Laken Riley Act, which expands the list of offenses that require detention of aliens.

Shortly after Trump signed the Laken Riley Act into law, his administration revoked an executive order that sought to eliminate the use of privately operated correctional facilities. At the same time, it authorized the detention of immigration-law violators until their deportation.

Against this backdrop, private prison operators have been expecting more contracts to come their way and describe the opportunity under the Trump administration as “unprecedented.”  

Since the beginning of the year, GEO Group shares have fallen nearly 45%. The stock has four “buy” ratings from Wall Street analysts and no “sell” recommendations, according to MarketWatch. The average target price of $37.80 per share implies upside of about 145%.

CoreCivic shares have declined almost 23% year to date. The stock also has four “buy” ratings, with an average target price of $29.50 per share, nearly 74% above its closing price on November 6.

The AI translation of this story was reviewed by a human editor.