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Thursday, Sep 26
J.C. Penney faces "different phase of problems" if Q4 comps aren't positive: Wells
- "If Q4 comps aren’t positive, we will likely move into a different phase of problems (liquidity concerns, customers gone for good, etc.)," Wells Fargo's Paul Lejuez says, lowering his price target on J.C. Penney (JCP +3.1%) to $6-7 from $10-11.
- Although Lejuez does see JCP's Q4 same-store sales gaining, he notes that "it's an achievement the market [should not] get too excited about" given the easy compare and inventory build.
- Assuming the company regains 75% of the sales it lost over the last two years and assuming margins jump 400 bps, EPS could get back to $0.25 but "It appears the stock is already trading as if this was going to happen next year. But it may not ever get back to these levels," Lejuez concludes.
- Earlier: JCP defends itself as sentiment sours