Morgan Stanley Maintains Underweight Rating on JC Penney

A report from Morgan Stanley reiterates its Underweight rating on JC Penney JCP. The report states, “In addition, we think JCP has very little pricing power, a neg. in a cost inflationary environment. In terms of 4Q guid., we see downside risk to mgmt's outlook on both the top line and gross margins. Our model is currently under review following the reporting of 3Q. With JCP shares trading at 20.4x 2012 P/E vs. peer group at 11.5x, we see both EPS risk and multiple contraction In this name in 2012.” JCP closed Friday at $33.92.