(Bloomberg) -- The shares of CoreCivic Inc. plummeted after US officials moved to close a costly facility used to detain migrants in Dilley, Texas. 

CoreCivic, which leases the facility and the site from a third-party lessor, saw its stock slide 20% Tuesday, the biggest one day drop in over four years, after US Immigration and Customs Enforcement said it will close the South Texas Family Residential Center. Shares of Target Hospitality Corp. fell by a record 31% on the expected contract termination. Both stocks extended losses from Monday when the closing was first reported by the Wall Street Journal. 

The closure follows President Joe Biden’s June 4 executive order banning migrants who cross the US southern border illegally from receiving asylum. ICE said Monday that the facility in Dilley is the most expensive in the national detention network. 

“Closing this facility will enable ICE to reallocate funding to increase the overall detention bed capacity across the system by an estimated 1,600 beds to better support operational needs,” the agency said in a statement, adding that additional bed space is expected to be available immediately. 

CoreCivic said the Dilley site had a population of 1,561 as of June 9. The private prison operator is suspending its financial guidance for 2024, and estimated that the closure would hurt annual earnings by 38 cents to 41 cents. 

“We will continue to be responsive to ICE’s needs and direction,” CoreCivic Vice President of Communications Steven Owen said in an emailed statement. Target Hospitality did not respond to requests for additional comment. 

The loss of the ICE contract led Wedbush analysts to downgrade shares of CoreCivic to neutral from outperform and cut its price target to $14 from $19. 

“While we anticipate that the company will be able to recoup some of its lost earnings through the re-allocation of funding to other ICE facilities, the net impact of this transaction remains unclear,” analysts led by Jay McCanless wrote in a June 11 note. “We are moving to the sidelines to reassess the company’s ongoing earnings power following the unexpected loss of this significant contract.” 

The ICE announcement is also likely to weigh on Target Hospitality’s earnings. The company has been reviewing a take-private offer. In March, the hospitality services firm received an unsolicited proposal to take the company private for $10.80 per share. The stock closed around $7.20 on Tuesday.

Target, which had previously set its annual revenue guidance at $410 million to $425 million, said it plans to give an update on the impact of the termination before June 30. 

Stifel analyst Stephen Gengaro estimated that the facility contributes about $55 million to Target Hospitality’s annual revenue and between $35 and $37 million of its gross profit. 

“We suspect there may be some downside to management’s guidance range, given the roll-off of contributions from its South Dilley facility,” Gengaro wrote, maintaining his hold rating on shares.

The US government termination of services agreements with the companies will be effective in 60 days, on or about Aug. 9. 

(Updates to add CoreCivic comment in paragraph five.)

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