J. C. Penney (JCP) Release Positive for Holiday Sales, Says Goldman (M) (TJX) (ROST)

Goldman Sachs maintained a Sell rating on J. C. Penney (NYSE: JCP) with a price target of $5.50. Yesterday J. C. Penney reported holiday comps rose 3.7. In the view of analyst Stephen Grambling, the release is positive for overall holiday sales.

"We view the release as a net positive for holiday sales across our broadlines coverage, but would focus on share gainers yet to report and offering greater visibility longer-term, including Buy-rated TJX (NYSE: TJX), ROST (Nasdaq: ROST), and M (NYSE: M)," said Grambling.

On J. C. Penney, he said, "After weaker 3Q SSS, management had indicated November was off to a good start as weather cooled. We believe the strength likely continued into Black Friday, moderated in early December, but picked up again near Christmas. Furthermore, JCP faces its easiest comparisons in January as inclement weather impacted customer mobility last year. As such, our 4Q comp estimate moves to 3.8%. Looking forward, we believe the 2H14 run-rate of ~2.5% likely reflects a more normalized trajectory given demand may have shifted from October to November across retail. Therefore, we now forecast a 2.6% comp for FY15, a sequential deceleration from 4Q, but modestly above our prior forecast."

"Our FY14/15/16 EPS estimates move up to ($2.37)/($1.13)/($0.73) from ($2.45)/($1.29)/($0.90). We remain below management’s long-term guidance and expect future potential EPS misses to drive a re-rating in the shares. We see 16% downside risk to our unchanged price target (30% vs. after hours)," he added.

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 $6.56 yesterday.

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