- GEO Group (NYSE:GEO) falls 2.9% and CoreCivic (NYSE:CXW) slips 1.0% in premarket trading after Beacon Policy Advisors said the Biden administration's policy shift targeting private prisons will have an outsized effect on the two stocks.
- "Biden has shown that he takes immigration and civil rights seriously, issuing a number of executive orders on his first day on these topics," Beacon said in a note.
- Some actions may need to wait until Senate confirmation of key DHS and DOJ appointees, as they manage a substantial portion of GEO's and CXW's federal contracts.
- Other companies that supply the prison system, such as catering, concession, telecom companies owned by private equity firms, and health companies, will also come under pressure, Beacon said.
- GEO has declined 39% and CXW 57% during the past year vs. the S&P 500's 18% increase.
- Taking a different perspective, SA contributor Rida Morwa sees GEO benefiting from the new administration and Democratic control of Congress.