CCA’s pipeline strong enough for higher price target
Posted on November 9, 2009 at 7:25 amAvondale Partners analyst Kevin Campbell says Corrections Corp. has the financial muscle, free cash flow and market position to add nicely to its book of business in the coming years. That has led him to raise his price target for the shares (Ticker: CXW) to $30 from $24, based on a 2011 profit estimate that is 15 percent higher than his 2009 forecast.
The company estimates that its inventory and development pipeline can add $50 million in incremental EBITDA over the long-term, with the majority of the interest and D&A expense already included in expectations. We estimate that this could add more than $0.25 in EPS at the current share count. In addition it has financial flexibility in 2009 and 2010 to take advantage of the current environment through continued development, share repurchases or debt reductions.
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Time to be greedy with Psych Solutions
Posted on October 29, 2009 at 12:05 pmAvondale Partners analyst Kevin Campbell says investors should take the opportunity to buy shares of Psychiatric Solutions after their big drop Wednesday. Campbell, who has an ‘outperform’ rating on the shares, says that — despite the Q3 rise in charity care — Psych Solutions’ fundamental story is still compelling.
“[D]emand for its services remains strong and valuations remain at the bottom of its historic range. We recognize that there are valid concerns about increased levels of charity care; however, we believe the issue is manageable.”
Campbell’s lowered target of $28 is almost 50 percent above where the company opened trading this morning. Shares of Psych Solutions (Ticker: PSYS) are up about 3 percent so far today.
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America Service renews Wyoming work
Posted on October 28, 2009 at 7:07 am
Previewing the third-quarter earnings America Service Group will announce this afternoon, Avondale Partners analyst Kevin Campbell notes that the company recently renewed a $20 million contract with the state of Wyoming. As for Q3, the consensus has Brentwood-based America Service (Ticker: ASGR) earning 29 cents per share on revenue of $158 million.
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CCA facing Oklahoma cuts
Posted on October 15, 2009 at 10:39 amOklahoma’s Department of Corrections will trim its budget by 5 percent to help the state manage a shrinking budget. Corrections Corp. of America manages more than 2,000 inmate beds in the state and, all other things being equal, would stand to lose about $2 million in annual revenues.
But Kevin Campbell at Avondale Partners says CCA and competitor GEO Group “will be able to offset these cuts with changes in the scope of services provided or increased inmates.” Shares of the Nashville company (Ticker: CXW) are down about 0.6 percent this morning.
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Analyst: Buy America Service on the dips
Posted on October 5, 2009 at 8:11 amAvondale Partners analyst Kevin Campbell says investors shouldn’t worry about the company’s decision not to try to renew its $18 million-a-year contract with Vermont. There are plenty of other growth avenues out there, he wrote on Friday — including in Arizona and Tennessee, where officials are preparing to hand out contracts totaling more than $100 million.
Campbell has tweaked his EPS estimates and lowered his price target from $20 to $19 to account for the Vermont move, but says investors should take advantage of the shares’ (Ticker: ASGR) recent weakness to jump in or add to their stakes.
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Win for CCA in Idaho
Posted on December 4, 2008 at 11:48 amCorrections Corp. gets a new and expanded contract from the state of Idaho. The deal adds more than 800 beds to the previous 1,270, which Avondale Partners analyst Kevin Campbell says will add $12 million to CCA’s annual top line and almost a penny to per-share profits. It’s the second Idaho win in as many months for CCA. (Ticker: CXW)
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