What Happened?
Shares of private prison operator CoreCivic (NYSE: CXW) jumped 1.6% in the morning session after the company announced it has been awarded two new contracts with U.S. Immigration and Customs Enforcement (ICE) expected to generate significant revenue.
The government-solutions company will provide 3,593 beds at two of its facilities, the California City Immigration Processing Center and the Midwest Regional Reception Center in Kansas. Once fully activated, CoreCivic expects these contracts to generate nearly $200 million in combined annual revenue. This figure represents approximately 10% of the company's current annual revenue. According to CEO Damon Hininger, the locations of these facilities, which were idle at the start of 2025, will enhance the company's ability to support its government partner in enforcing immigration laws. The stock saw a positive reaction in pre-market trading following the news.
After the initial pop the shares cooled down to $21.96, up 1.9% from previous close.
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What Is The Market Telling Us
CoreCivic’s shares are somewhat volatile and have had 12 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 18 days ago when the stock gained 4.4% as the Consumer Price Index (CPI) report bolstered expectations for a Federal Reserve interest rate cut despite showing persistent inflation. The August CPI data, a key measure of inflation, showed prices rose 2.9% annually, slightly more than economists expected. While inflation remains above the Federal Reserve's 2% target, investors were focusing on other signs of a cooling economy, particularly a weakening labor market.
As a result, the market widely anticipated that the Fed would cut interest rates at its September meeting to support the economy. Investors priced in multiple rate cuts by year-end, which boosted market sentiment and sent Treasury yields lower.
CoreCivic is up 1.2% since the beginning of the year, and at $21.96 per share, it is trading close to its 52-week high of $23.94 from November 2024. Investors who bought $1,000 worth of CoreCivic’s shares 5 years ago would now be looking at an investment worth $2,694.
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