Corrections Corp. of America officials are pushing back against an audit of their Idaho operations by KPMG that purportedly showed the company had understaffed a 2,100-bed prison by 26,000 hours. The Nashville-based company, which has hired an attorney to push KPMG to agree that its report was inconclusive, will turn over the operation of the Idaho Correctional Center in June and has agreed to pay $1 million as part of a settlement with state officials.
The report could impact the Tennessee-based company's other government relationships. Idaho corrections officials say prison leaders in several states and the U.S. Department of Justice have asked for copies of the audit. CCA is one of the largest private prison companies in the world, reporting $1.7 billion in revenue in 2012.
A federal court on Monday gave California officials another two years to comply with its order to reduce the state's prison population. The ruling calls for California to cut the number of inmates by 5,400 between now and the end of February 2016. The move stings a bit for shareholders of Corrections Corp. of America and GEO Group, which had been set to benefit if California had been forced to export inmates to other states. On top of that, says CRT Capital analyst Brian Ruttenbur, CCA also might end up having to transfer California inmates from some of its facilities in other states.
CCA's stock (Ticker: CXW) dove 7 percent on heavy volume after the news broke Monday afternoon, but recovered a bit to close down 3.7 percent. It's down about 10 percent over the past three months.
Miller Tabak analyst Stephen Anderson has raised his rating on shares of Cracker Barrel Old Country Store to 'buy' from 'hold.' His new price target for the stock, which has retreated 10 percent to about $99 in the past three months (Ticker: CBRL), is $114.
The fourth-quarter results of Corrections Corp. of America shouldn't contain many surprises, says Avondale Partners analyst Kevin Campbell, who has wrapped up his latest set of channel checks. The expected drop in inmate counts, he says, won't be as big as expected, which means revenues for the quarter should top $416 million. Campbell expects CCA's EPS to come in at 42 cents versus a consensus of 41 cents. Over at Barclays, meanwhile, Manav Patnaik has reiterated his 'outperform' rating but lowered his target for CCA (Ticker: CXW) to $39 from $45.
Analysts at CRT Capital have begun covering shares of locally based prison management company Corrections Corp. of America and its main publicly traded competitor, GEO Group. The firm thinks GEO presents a better opportunity right now and has rated that stock (Ticker: GEO) a 'buy' with a price target of $41, up more than 20 percent from its current level. CCA shares (Ticker: CXW) get a 'fairly valued' rating and a $35 target, about a dollar above their Friday close.
Arizona Department of Corrections Director Charles Ryan plans to ask state legislators to speed up the schedule for him to place 1,000 inmates at a Corrections Corp. of America facility. Initially planned to take place across two years, Ryan says overcrowding at other facilities calls for a one-year deployment — even as a number of sheriff's offices say they'd be willing to take on the inmates.
Indiana officials have signed a three-year extension of their contract to outsource inmate health care to Brentwood-based Corizon. The 28,000-person deal comes with two renewal options of three years each and builds on a relationship the two parties have had since 1997.