NEW YORK (TheStreet) -- Shares of GEO Group (GEO - Get Report) were soaring 14.40% to $22.32 in mid-morning trading on Friday despite the Federal Bureau of Prisons (BOP) saying it had rescinded its contract renewal with the Boca Raton, FL-based private prison operator's D. Ray James Correctional Facility.
The disclosure contrasts with GEO Group's earlier announcement that the BOP had extended its contract with the Folkston, GA-based facility through Sept. 30, 2018.
"Based on ongoing discussions between GEO and the BOP, GEO expects to receive a new contract modification to operate the facility under new terms to be negotiated," GEO Group had said in a statement.
The report follows a Department of Justice (DOJ) memo instructing officials to "substantially reduce" the scope of private prison contracts and ultimately end their use altogether.
GEO Group manages 96 facilities worldwide, with an average occupancy rate of 95%. It operates several facilities under contract with the Immigration and Customs Enforcement.
Shares of GEO Group and rival Nashville-based private prison operator Corrections Corp. (CXW) lost more than a third of their market value yesterday after the DOJ decision.
Corrections Corp. stock was up 9.07% to $19.25 this morning.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate GEO GROUP INC as a Buy with a ratings score of B. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity and reasonable valuation levels. We feel its strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.
You can view the full analysis from the report here: GEOGEO data by YCharts