Goldman Sachs Comments on J. C. Penney (JCP) Ahead of Its Investor Day

Goldman Sachs maintained a Neutral rating on J. C. Penney (NYSE: JCP) with a price target of $7. Analyst Stephen Grambling doesn't expected management to announce strategic alternatives or provide commentary on leadership transition at its investor day on October 8.

"Beyond an update on near-term trends, investors are likely focused on JCP’s long-term roadmap, including comp and profitability drivers from management’s merchandising, omnichannel and marketing initiatives. We do not expect management to announce any major strategic alternatives or provide commentary on leadership transition ahead of the holidays," said Grambling. "We lower our EPS estimates ahead of the meeting to reflect slightly softer comp momentum post Back-to-School amid weaker discretionary spending. We remain Neutral with 30% potential downside to our price target."

"At the current run-rate of top-line growth, we estimate that it will take over 8 years for JCP to return to a $17bn+ retailer. As such, we believe management may need to address a “plan B” to right-size JCP to more appropriately match sales by addressing marketing and assets," he added. "With the old merchandising set largely back in store, we expect JCP to focus on new opportunities to sustain mid-single-digit comp growth with a focus on challenged areas such as home, kids, footwear and handbags."

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 $10.00 yesterday.

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