Analyst Says Not to Chase J.C. Penney’s Citigroup Upgrade

By Trey Thoelcke Published Mar 12, 9:50AM EDT

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J.C. Penney Co. Inc.’s (NYSE: JCP) long-suffering shareholders recently got a break when Citigroup went out on the contrarian limb and upgraded the stock to Buy after the company finally posted some much better than expected earnings on February 26. After years of a brutal battle in which activist investor Bill Ackman took control, installed former Apple executive Ron Johnson and then ended up selling his stake and Johnson being fired, excited investors pushed the highly shorted stock up 65%.

While the company has taken some positive steps, the retail analysts at Sterne Agee are advising their clients that chasing this name is not a good idea. In fact, in a new research report, they concede that while store traffic is improving, they see no clear indication that the company can attain comparison store sales levels that will generate enough cash to ward off the impending liquidity issues.

While the Ron Johnson era of trying to remold the iconic American retailer into some sort of hip retail go-to place is clearly over, the work of rebuilding the image and the brand with the core consumer is just beginning. That is the process that the Sterne Agee team is wary of, and they believe it is one that could take years despite the current positive steps in the right direction. They maintain their Neutral rating and advise clients to stay on the sidelines for now.

About the Author Trey Thoelcke →

Trey has been an editor and author at 24/7 Wall St. for more than a decade, where he has published thousands of articles analyzing corporate earnings, dividend stocks, short interest, insider buying, private equity, and market trends. His comprehensive coverage spans the full spectrum of financial markets, from blue-chip stalwarts to emerging growth companies.

Beyond 24/7 Wall St., Trey has created and edited financial content for Benzinga and AOL's BloggingStocks, contributing additional hundreds of articles to the investment community. He previously oversaw the 24/7 Climate Insights site, managing editorial operations and content strategy, and currently oversees and creates content for My Investing News.

Trey's editorial expertise extends across multiple publishing environments. He served as production editor at Dearborn Financial Publishing and development editor at Kaplan, where he helped shape financial education materials. Earlier in his career, he worked as a writer-producer at SVE. His freelance editing portfolio includes work for prestigious clients such as Sage Publications, Rand McNally, the Institute for Supply Management, the American Library Association, Eggplant Literary Productions, and Spiegel.

Outside of financial journalism, Trey writes fiction and has been an active member of the writing community for years, overseeing a long-running critique group and moderating workshop sessions at regional conventions. He lives with his family in an old house in the Midwest.