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Sterne Agee CRT Upgrades JC Penney, Worth $13/Share

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Sterne Agee CRT Upgrades JC Penney, Worth $13/Share
  • The share price of J C Penney Company Inc (NYSE: JCP) has risen almost 46 percent year-to-date, reaching a high of $9.98 on September 8.
  • Charles Grom of Sterne Agee CRT has upgraded the rating from Neutral to Buy, with a price target of $13.
  • Following a meeting with the company’s new CEO, Grom expressed confidence in JC Penney’s turnaround plan. Grom believes that the stock could see upside of more than 30 percent.

Analyst Charles Grom believes that the new CEO, Marvin Ellison, “has the right demeanor, discipline, and business acumen to “right the ship”,” mentioning that Ellison intends to build off JC Penney’s previous core competencies, rather than trying to create an alternative brand identity for the company.

While industry headwinds continue to impact the department store industry, Grom expects JC Penney’s turnaround initiatives to drive meaningful improvements to the EBITDA, “so much that the current $1.2B EBITDA goal (for 2017), which many view as a ceiling . . . will soon become a floor.”

Grom also believes that the company has “multiple levers” that can boost same-store sales up, such as the resetting of presentations of fashion accessories, handbags, sunglasses, etc, at Sephora going into 2016, encouraging initial results from the open format presentation of women’s footwear, started across the chain in July, among others.

According to the Sterne Agee report, the key to Ellison’s strategy “will be a focus on process efficiency across the organization, and relatedly, the establishment of a world class e-commerce organization.”

In addition, the CEO intends to put in place cost savings initiatives that will be accretive to the gross margin, with Ellison establishing a more disciplined culture and putting a more efficient system in place.

Latest Ratings for JCP

DateFirmActionFromTo
Nov 2019MaintainsNeutral
Mar 2019MaintainsNeutralNeutral
Dec 2018Initiates Coverage OnUnderweight

View More Analyst Ratings for JCP
View the Latest Analyst Ratings

Posted-In: Charles Grom Sterne Agee CRTAnalyst Color Upgrades Analyst Ratings Best of Benzinga

 

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