Target Hospitality's rating was downgraded by S&P due to contract instability.

S&P Global Ratings has downgraded Target Hospitality Corp.'s rating from 'B+' to 'B' due to contract fluctuations, while maintaining a stable outlook. The company, a provider of specialized rental and hospitality services, recently announced the termination of the Pecos Children’s Center (PCC) service contract by the U.S. government, which was a significant revenue source generating a minimum of $168 million annually for Target.

In response to this termination, Target signed a new contract with CoreCivic in March 2025, expected to alleviate some financial pressures later in the year. However, S&P Global Ratings anticipates a substantial decline of approximately 35% in Target's operational performance in 2025. The stable outlook reflects expectations that Target can partially offset contract losses with new business gains, including contracts that could generate significant revenue in the coming years.