Bank Of America Sees Turnaround Taking Hold For J.C. Penney

In a report published Friday, Bank of America analyst Lorraine Hutchinson reiterated a Neutral rating and $11.00 price target on J.C. Penney JCP. In the report, Bank of America noted, “J.C. Penney reported an adjusted 2Q per share loss of $0.72, above our $(1.05) estimate. Better than expected sales and margins drove the beat. Management lifted its FCF outlook and now expects it to be positive in F2014 (vs. prior guidance for break-even) due to $43mn of income from the sale of excess land and better than expected 1H performance. We are modelling negative FCF of $28mn, and infer that a lower operating income outlook is the delta versus management's target. We are raising our forecast by $0.61 to reflect higher sales and margins and now expect a loss of $2.33 per share. We remain Neutral as we think a full recovery is still a long way out and the bar is set high on execution, especially given a highly competitive environment.” J.C. Penney closed on Thursday at $9.74.