Title 42 Ruling. Last week U.S. District Judge Emmet Sullivan blocked the Federal government from expelling migrant families from the United States under “Title 42.” The order takes effect in 14 days. The government has filed a notice of appeal to the United States Court of Appeals for the District of Columbia Circuit. If upheld, the elimination of Title 42 expulsions could increase demand for CoreCivic beds.Key Points. In a 58-page ruling, Judge Sullivan found that the Title 42 policy does not authorize the expulsion of migrants and therefore does not allow for those removed to be denied the opportunity to seek asylum in the U.S. While the ruling applies to families, many of whom are already being allowed to stay in the U.S., if Title 42 does not authorize the expulsion of families one can see the ruling eventually being applied to single adults.Border Encounters Remain Elevated. Border encounters were nearly 209,000 in August, down slightly from 213,534 in July, but up 318% y-o-y and up 233% from 2019. Fiscal YTD, border encounters are 1,541,651, with one month to go, up 236.5% from full year 2020, and up 57.7% from full year 2019.Contracts. CoreCivic expects the USMS to not renew its West Tennessee contract upon expiration at the end of September. CoreCivic is in negotiations with other government agencies for use of the facility. In New Mexico, CoreCivic has entered into a new lease agreement for its Northwest New Mexico Correctional facility, although operation of the facility will now be handled by the state.Maintaining Outperform and $15 PT. We continue to believe CXW shares present a compelling risk/reward opportunity. We believe the services offered by CoreCivic are needed by its government partners to solve the complex issues they face. We are maintaining our Outperform rating and $15.00 12-month price target. At our target, CXW shares would trade at 16.3x our adjusted EPS estimate, 7.7x our AFFO estimate, 8.7x adjusted EBITDA, and 1.8x revenue. Read More >>