Risks, volatility remain for Corrections Corp. and GEO Group, Canaccord says

|By:, SA News Editor

Private prisons aren't going anywhere but neither are the risks to Corrections Corp. of America (NYSE:CXW) and GEO Group (NYSE:GEO), Canaccord analysts say, after shares of each plunged 30% in the five trading days since the U.S. Department of Justice said last week that it would begin to cut back on its use of private prisons.

While Canaccord sees minimal near-term risk to the non-Bureau of Prisons contracts of both companies, making the stocks "very cheap," it maintains concerns surrounding BoP contract cancellation headlines, a likely CXW dividend cut, and risk of a CVX covenant breach that also could weigh on GEO in the near-term.

The firm reiterates its Hold rating on CXW and Buy rating on GEO, but cuts its CXW price target to $21 from $30 and its GEO target to $28 from $38.

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