UPDATE: Buckingham Research Doubts J.C. Penney Credibility and Recovery, Downgrades Shares and Lowers PT

In a report published Friday, Buckingham Research Group analyst David Glick downgraded J.C. Penney Co.

from Buy to Neutral and significantly lowered the PT from $20 to $10. Yesterday, JCP announced Goldman Sachs is underwriting their public equity offering for 84M shares. Initial offering was priced at $9.65 a share, approximately $811M (before fees) and 40% dilution for existing shareholders. Glick noted, “The underlying reasons for this sudden need for expensive capital, the damage to JCP's credibility, and the more challenging than expected consumer environment all pose threats to the pace of JCP's recovery.” Buckingham Research Group reported their doubts of management's credibility, JCP's overall recovery, operating projections, and stability during the holiday period. Further, the analyst is concerned with the repercussion of the earlier public announcement where JCP commented that they do not need to raise capital. Glick forecasted FY13 EBITDA estimates of $604M and FY14 EBITDA estimates of $163M. JCP closed at $10.42 on Thursday.