New Legislation Sends Prison Stock to Fresh Low

Prison stock CXW is a huge loser today

by Josh Selway

Published on Dec 19, 2018 at 3:06 PM

Stocks have erased their earlier gains after the Fed decided to raise interest rates, and signaled support for "further gradual increases." In the meantime, traders are monitoring a huge post-earnings pullback from delivery giant FedEx Corporation (NYSE:FDX), new legislation sinking prison stock CoreCivic, Inc. (NYSE:CXW), and buyout buzz around semiconductor name Mellanox Technologies, Ltd. (NASDAQ:MLNX). We'll take a closer look at shares of FDX, CXW, and MLNX below.

FDX Hits New Low After Shocking Guidance

FedEx last night substantially lowered its 2019 forecast, saying there's been a noticeable slowdown in the global economy. This news has the stock at fresh lows, with FDX earlier bottoming at a two-year worst of $165.66 and last seen at $167.17, down 9.6% on the day. At these levels, FDX shares' year-to-date deficit has fallen to 32.5%.

A number of analysts chimed in with price-target cuts, including Oppenheimer which lowered its FedEx price target to $234 from $288. More bearish analyst attention could be coming in the future, too, since so many brokerage firms are still bullish. To be more specific, 15 of 19 analysts in coverage have "buy" or "strong buy" ratings.

First Step Act Sends Prison Stocks Spiraling

CXW stock is sliding on news the U.S. Senate has passed the First Step Act, a measure to reduce the sentences of certain prison inmates. The shares were last seen down 5.6% at $18.97, hitting a new 52-week low of $18.59 earlier, extending their multi-month downtrend that began after an August high above $26.

It's possible a few short sellers saw this sell-off coming, since short interest rose 18.6% in the last two reporting periods on CoreCivic. At the same time, just 1.8% of the total float is sold short.

MLNX Could Be a Microsoft Target

MLNX stock is gaining, up 3.8% at $92.25, thanks to reports Microsoft (MSFT) could buy the company. Still, the shares remain in the $85-$95 range that they've bounced between since early November. Longer term, the semiconductor specialist has added almost 43% in 2018, and hit a six-year high of $99.14 on Nov. 7. Such outperformance has earned Mellanox Technologies mostly bullish attention from analysts, with 10 of 11 calling the security a "strong buy."

 


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