GEO Group (GEO) Stock Forecast & Price Target

The GEO Group is experiencing a notable increase in detention populations, with an uptick of approximately 5,000 inmates, bringing total detentions to 56,400, which enhances operational capacity. Revenue projections for fiscal years 2025 and 2026 have been revised upwards to $630 million and $659 million respectively, reflecting the impact of the U.S. Marshals Service contract and positioning the company for robust financial performance. Additionally, the potential activation of ~6,000 beds from idle facilities could generate over $300 million in annualized revenue, and a conservative estimate of non-residential unit growth suggests a significant increase in AEBITDA, further substantiating a positive financial outlook.

The GEO Group Inc faces significant challenges related to funding and reputation risks, as heightened scrutiny from regulators and investors centered on ESG issues may limit its access to debt and equity capital, thereby undermining the company's valuation. Furthermore, the company is revising its financial estimates downward, with FY25 adjusted EPS reduced to $0.82 and revenue estimates lowered to $2.50 billion, reflecting struggles to secure contracts and slower-than-expected growth in its detention capacity operations. Additionally, the inherent leverage risk stemming from fluctuations in interest rates could adversely affect returns to shareholders and lead to volatility in dividends, further compounding the company's financial difficulties.