Morgan Stanley Doubtful JC Penney "Will Make Money Again"

Morgan Stanley gave J C Penney Company Inc

credit for stabilizing the business in 2014, but said that it still expects shares of the company to shed more than 34 percent from yesterday's close at $9.12 to its price target at $6. The analysts have reiterated an Underweight rating. Wall Street investors seemingly agree with Morgan Stanley as the stock is indicated nearly 15 percent lower in premarket trading.

Looking to the future, Morgan Stanley cautioned that "operating improvement from here will be more difficult to come by." That thesis underscores the analysts' expectation that the company will be unprofitable until at least FY18. And even then, Morgan Stanley remained "doubtful" that JC Penney will "make money again."

By way of headwinds, Morgan Stanley noted that JC Penney will have to "deliver significant operational improvement" to reach its goal of $0 free cash flow. And that is improvement that the analysts at Morgan Stanley do not expect to happen.