Title 42 to End? The Biden Administration has stated the enforcement of Title 42 to expel immigrants will end May 23rd. First authorized in March 2020 during the COVID crisis, Title 42 continued to be enforced by the Biden Administration over the past year as a key tool to stop the spread of the virus in border facilities, but with the decline in COVID cases, the Administration will end the use of Title 42.Poised for a Surge? In the first five months of the government fiscal year, monthly Southwest border encounters are averaging nearly 170,000 and are on pace to top two million for the year. Some reports suggest the number of people crossing once the restriction is lifted could triple to 18,000 per day, or more than double the current monthly encounter amount.But Are We Ready? Unfortunately, it appears the answer is it remains to be seen. While the Federal government suggests there will be a “comprehensive, whole-of-government” approach to lifting Title 42, many local elected and border officials have been quoted as saying they are in the dark about what to do, with some accusing the Biden administration of having “no plan.” What Can It Mean for CXW? The ending of Title 42 should result in a significant need for detention facilities, especially if projections about a border surge prove accurate. With significant unused capacity, such a surge could result in a significant increase in revenue and EBITDA for CoreCivic, although it remains to be seen if the Administration will employ the private sector solution to assist in managing this potential crisis.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 19x our 2022 adjusted EPS estimate, 9.0x our 2022 AFFO estimate, 7.7x adjusted EBITDA, and 1.5x revenue. Read More >>