Did Brian Sozzi Really Upgrade J.C. Penney?

Brian Sozzi of Belus Capital Advisors has certainly made his bearish position on

clear as he has not budged from his Sell rating dating back to January 2012. Unti now. In a note to clients on February 26, Sozzi described J.C. Penney's loss per share quarterly report that “attempts to lure you in like the smile of a cute puppy does from afar.” But after closer inspection and digging in to the core of the report, “like that aforementioned cute puppy, it could pee on you if not careful to move out of the way.” Yolo, right? “It's with that only go around once spirit as background, we issue our first upgraded on J.C. Penney, well, ever,” Sozzi wrote in a note to clients on Thursday. “Yolo, so why not upgrade J.C. Penney.” Why not? More importantly, Why yes? Sozzi explains that when the weather has been cooperative in the first quarter, J.C. Penney was able to “suck in” a good amount of foot traffic through a combination of effective promotional messaging, better availability of name brand merchandise and basics, and perhaps most importantly, a store that is actually cohesive in its layout. Sozzi is known as being an analyst that employs a “boots on the ground” philosophy. What he sees is what he reports. And Sozzi appears to like what he sees! With Sozzi's store level observations, coupled with the stock's relative outperformance during the recent broader market pullback, and a general feel in the air that a “return of the old, somewhat boring J.C. Penney” is back will improve investor sentiment. Sozzi argues that the company could be in a position to deliver a 2014 holiday performance that would remove bankruptcy concerns and eliminate any future capital raising requirements. “Such an assumption… not priced into the stock,” Sozzi believes. Sozzi also dug deep into J.C. Penney's 10-k report and discovered that the company's pension plan expense will improve to an income of $19 million in 2014 compared to a $100 million expense in 2013. Also in the 10-k report is an easily forgotten tidbit that the retailer is sitting on $2.1 billion in net operating loss carry forwards that expire in 2032. Shares are Hold rated (upgraded from Sell) with a $9 price target.