- Fears of a capital raise are "off the table" says Wells Fargo's Paul Lejuez, pulling his sell rating and raising the PT to $6-$7 from $4-$5. FQ4 was a weak one, but management "took a more confident tone, giving decent fiscal 2014 guidance that featured comp and GM improvement. FQ4 expense savings seem permanent and are expected to flow through to fiscal 2014."
- "While we can still argue that the stock may not present much value to equity holders, the company itself seems to be standing up better that many previously thought."
- Acknowledging what looks to be a big rally today, Goldman's Stephen Grambling continues to have concerns: "1) if merchandise margins are back at 2011 levels on "good" product and discontinued brands were only a 190bp headwind, what else is pressuring gross margin vs. history; and 2) with 390M in interest expense and $4B in SG&A, JCP would require $4.4B+ in gross profit or a high 30% margin to generate positive EBITDA on LSD-MSD comps."
- He also notes the stock isn't necessarily cheap compared to peers. "Our price target and rating (Neutral) are under review."
- Earlier earnings coverage
- JCP +25% premarket
J.C. Penney flies 25% higher post-earnings
Feb 27 2014, 09:17 ET