JP Morgan Overweight on JC Penney's 16.6% Acquisition of Martha Stewart Living

JP Morgan has published a research report on JC Penney JCP after the company announced this morning that it acquired a 16.6% stake in Martha Stewart Living MSO. In the report, JP Morgan writes, "JC Penney announced this morning that is has acquired a 16.6% stake in Martha Stewart Living Omnimedia (MSO/NR) for $38.5mil, or $3.50 per share, through which JCP will receive two seats on the MSO board. We view this as a positive step to revitalizing the home business at JCP – the Achilles heel to its lagging top-line performance. While still early, the pieces of the turnaround plan (merchandising, management) appear to be transpiring faster than we anticipated. Recognizing that it will take time for these developments to manifest in P&L results, we are very encouraged by the initiatives underway with further transparency into CEO Ron Johnson's longer-term plan on the way at the upcoming analyst day (1/25 in NYC)." JP Morgan maintains its Overweight rating and $37 price target on JC Penney, which is currently trading up $0.32 from yesterday's $33.30 closing price.