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UBS Lowers Numbers on J. C. Penney (JCP); Analyzing The Bull & Bear Case

August 14, 2012 1:15 PM EDT Send to a Friend
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Price: $10.54 -2.41%

Rating Summary:
    5 Buy, 16 Hold, 6 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 24 | Down: 14 | New: 52
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UBS maintains a 'Neutral' on J. C. Penney (NYSE: JCP) price target of $23.00 (from $24.00).

Analyst, Michael Binetti, said, "With increasingly disparate potential outcomes over the next 2-yrs, we explore bull & bear scenarios to help frame JCP’s valuation. Our bear case assumes that new initiatives don’t capture consumer traffic, SSS remains negative (-3% in ‘13), and EBIT margins remain in the low single digits—which could result in stock downside to $10 (4x EBITDA). Our bull case assumes SSS accelerates (+7% in ‘13) amid easy compares as new shops open, and GM’s approach JCP’s 4.0% target by ’15—which could push the 1-yr fwd stock value to $46 (7x EBITDA)."

Binetti lowers FY13 from $1.04 to $0.21 ($0.75 ex-pension) and FY14 from $2.48 to $1.52. 3Q & 4Q same-store sales lowered to -15% & -10% (from -10% & -5% previously). All in, Binetti keeps a Neutral rating, preferring to wait for stronger proof of execution on the company's new targets.
For an analyst ratings summary and ratings history on J. C. Penney click here. For more ratings news on J. C. Penney click here.

Shares of J. C. Penney closed at $22.67 yesterday.




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