Shares of two major prison operators jumped in Wednesday trading following an upbeat report on the industry from a Barclays analyst.
Manav Patnaik said he sees early signs that the industry dynamics are improving in favor of companies like The Geo Group Inc. and Corrections Corporation of America. The analyst pointed to potentially improved pricing, new contracts and increased utilization as key drivers of the change.
According to him, seven of Corrections Corp.'s 17 state customers are factoring price increases into their early budgets and 10 are projecting population growth. He also noted that both Corrections Corp. and Geo Group could benefit from recent refinancing.
The analyst raised his price target on both of the non-traditional real estate investment trusts to $45. He also upgraded his rating on Geo to "Overweight" and reiterated an existing "Overweight" rating on Corrections Corp.
Shares of Corrections Corp., based in Nashville, Tenn., rose $1.27, or 3.3 percent, to $40.30 in afternoon trading. The stock hit $40.90 earlier, a 52-week high.
Shares of Boca Raton, Fla.-based Geo rose $1.12, or 3 percent, to $38.10 and also hit a 52-week high of $38.35 earlier in the session.