J.C. Penney's (JCP) Buy Rating Maintained at Deutsche Bank
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Deutsche Bank maintained a Buy rating on J. C. Penney (NYSE: JCP) with a price target of $12. Comments follow the release of Q2 results. Analyst Paul Trussell said results show continued relative outperformance.
"JCP’s 2Q results showcase its continued outperformance vs. the peer group and unique position to drive accelerating trends (opposed to banking on easing comparisons and better weather). JCP was the only dept. store with positive comps in 2Q, is the only dept. store to maintain FY guidance provided at the beginning of the year, and is the only dept. store with a clear strategy to grow its non-apparel categories in a meaningful way and become a market share taker in the process. We acknowledge that the bar for 2Q comps was raised yesterday and JCP didn’t surpass it, and we also acknowledge that 2H acceleration to MSD comps seems difficult to achieve (we are modeling only ~3% SSS in 2H), but we continue to be impressed with the overall pace of the turnaround which now includes appliances in 500+ stores (the majority in malls with Sears), a strong offering from Ashley Furniture, a growing Sephora presence (which is adding Clinique products), center core refreshes, plus size boutiques, expanded active-wear offering of private brand Xersion and from Nike in girls, BOPIS, an improved loyalty program, and importantly a refinancing of the company’s debt with extended maturities. We are confident in our EBITDA estimates and expect JCP’s performance gap vs. other mall-based apparel retailers to be maintained. Buy," said the analyst.
Shares of J. C. Penney closed at $9.94 yesterday.
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