B. Riley: We're Buyers Of JC Penney After New Numbers

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  • J C Penney Company Inc JCP shares are down 24 percent since October 9.
  • B. Riley analysts maintained a Buy rating for the company, with a price target of $12.50.
  • The company is among the “more attractive turnaround stories” in retail, the analysts stated.

JC Penney announced 3.9 percent comps for the 9-week November and December period, backed by a strong ecommerce performance. The company reaffirmed its EBITDA guidance for FY15 at $645MM. This implies with positive free cash flow in FY15, as compared to breakeven guidance provided earlier.

“JCP noted the strength of its ecom/omni business as a driver for Holiday, which we believe was a critical component to success during the period, in light of the broader shift to digital that we perceived,” the analysts wrote.

Despite the company noting headwinds in apparel, due to weather conditions, the initiatives taken during 2015 enabled JC Penney to outperform peers and gain market share during the period, while also generating EBITDA in line with guidance.

“We would argue that this was a feat for this particular season. Finally, with execution tracking well, we continue to feel that JCP is one of the more attractive turnaround stories in retail. With the stock well off its recent highs, we are buyers,” the B. Riley report noted.

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Posted In: Analyst ColorLong IdeasReiterationAnalyst RatingsTrading IdeasB. Riley
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