J C Penney Company Inc (JCP) — This once-thriving department store chain has struggled in recent years. The retailer lost many customers as a result of numerous strategic mistakes. But J C Penney appears to be refocusing on its core strategies as it attempts a turnaround.
On Monday, Sterne Agee CRT upgraded JCP stock to “buy” from “neutral” with a price target of $13. Sterne Agee analyst Charles Grom expressed confidence in J C Penney’s new CEO, Marvin Ellison, and his ability to “right the ship” as he focuses on the company’s previous core competencies, efficiency, cost savings initiatives and e-commerce. Grom also noted multiple opportunities to boost same-store sales.
The consensus expectation is for losses to narrow from $2.67 per share in fiscal 2015 (ended in January) to a loss of $1.29 in FY 2016 and a loss of $0.41 in FY 2017.
After achieving a high over $43 in February 2012, JCP stock fell to a low under $6 in December 2014. Shares then gapped up to the $8 area in early 2015, ran to a high above $9 in February, and then consolidated between $8 and $9.25.
That consolidation was broken by a high-volume breakout at $9 in September. Buyers drove JCP stock to a high over $10 before shares dropped back near the breakout point.
A pullback following a high-volume break is normally the result of profit-taking and offers new buyers an opportunity to acquire a stock with improving fundamentals. My buy under price for JCP stock is $9 with a target of $12 by the end of the year. This would result in a gain of more than 30% in just over 90 days.
