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CXW: Delays in La Palma Transition & Title 42 Reversal Mask Underlying Strength

By M. Marin

NYSE:CXW

READ THE FULL CXW RESEARCH REPORT

Slower than expected population transition at La Palma facility constrains occupancy

CoreCivic (NYSE:CXW) reported 2Q22 results that we believe reflect the underlying strength of the company's core business, although timing delays at the La Palma facility, which is taking longer than originally anticipated to transition to a new contract with Arizona, and in reversing Title 42 led to a shortfall from our revenue expectations. As CXW prepares to receive Arizona state inmates at the La Palma facility, the average daily population of ICE (Immigration and Customs Enforcement) populations at the facility is declining. Moreover, court action to stop the reversal of Title 42 also impacted revenue. Once Title 42 is lifted, we anticipate an increase in demand for occupancy at CXW facilities, as ICE apparently does not have sufficient supply to satisfy demand.
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