GEO Group (GEO) Stock Forecast & Price Target

The GEO Group's stock outlook is positively influenced by a recent increase in detentions, which rose by approximately 5,000 inmates to a total of 56,400, indicating strong demand for its services. Revenue projections for managed-only operations in FY25 and FY26 have been raised to $630 million and $659 million, respectively, reflecting the impact of the U.S. Marshals Service contract. Additionally, the company's potential activation of 6,000 beds across six idle facilities could generate over $300 million in annualized revenue, with significant increases to EBITDA anticipated from both existing and potential non-residential unit growth.

The GEO Group Inc's outlook is adversely affected by heightened reputation risk among regulators and lenders stemming from increasing ESG concerns, particularly regarding social justice issues, which may impede the company's ability to secure funding. Additionally, the forecasted financial metrics have been adjusted downward, with FY25 adjusted EPS estimates revised to $0.82 and revenue estimates to $2.50 billion, reflecting the recent Lawton disposition and anticipated challenges in meeting detention capacity. Furthermore, the company faces leverage risks tied to fluctuations in interest rates on borrowings, potentially diminishing returns for common shareholders and introducing volatility to dividend payouts.