UPDATE: Maxim Group Downgrades J. C. Penney (JCP) to Sell; Analyst Says Its 3-Year Outlook is Optimistic

(Updated - October 10, 2014 8:04 AM EDT)

Maxim Group downgraded J. C. Penney (NYSE: JCP) from Hold to Sell with a price target of $4. The change follows comments made during its analyst day. Analyst Rick Snyder thinks the company's outlook for the next three years "optimistic" given the promotional environment.

"In our note on 10/6, we suggested backing in to whatever assumptions the market was pricing into J. C. Penney shares. However, with additional clarity gained from the analyst day, specifically, comments regarding few, if any, store closures, we now believe that we can apply more traditional valuation means to the shares," said Snyder.

"The company delivered what we believe to be an overly optimistic outlook for the next three years. In the current promotional environment, we believe that the company's forecast of $14.5 billion in revenues, which equates to a 5.6% compound annual comp rate (CACR) from our 2014 $12.3 billion estimate in 2014, is too optimistic in what we expect to be a promotional time period. Our CACR of 1.6% until 2017 is in line with what we believe will be the growth rate for the department store segment over this three-year period," 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 $7.64 yesterday.

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