J.C. Penney Company, Inc. (NYSE:JCP) has been struggling to recover over the last few years, most recently in the wake of ex-CEO Ron Johnson’s ouster. Today JPMorgan analysts Matthew R. Boss, Anne McCormick and Michael J Joyce issued a fairly bullish report on the retail chain.

J.C. Penney

Takeaways From J.C. Penney Walkthrough

The analysts hosted a walkthrough of the retail chain’s Stonebriar location and noted three important items. First, J.C. Penney Company, Inc. (NYSE:JCP) is expecting to see normalized inventory levels by the time back-to-school days roll around. The company said it is replenishing the basics, which carry less of a fashion risk, and also other key items for the center-aisle displays.

The analysts also said that traffic has improved meaningfully since the department store chain returned to its promotion model late in the first quarter. J.C. Penney has gone back to expanded marketing through print and circulars and also begun remerchandising to bring back the brands which previously attracted its core customer.

They also said that there was a very positive reception to the chain’s Memorial Day home store soft-launch, which formally launches this week.

Will J.C. Penney Return?

At this point of course Mike Ullman is back at the helm of J.C. Penney, and he’s working to stabilize the ship. They say that “early signs of life” at the aging chain are encouraging and that their tour of the Stonebriar location helped to confirm these signs of life for them.

Currently J.C. Penney has an average sales productivity of $116.80 per square foot of store space, although JPMorgan analysts believe that the chain will go back to around $150 per square foot. The company’s peak sales productivity was in 2006 when it was bringing in $193.90 per square foot.

This same analyst team from JPMorgan raised its price target for J.C. Penney Company, Inc. (NYSE:JCP) last week, and they maintain that target increase. At this point, the company’s stock is trading just shy of that $18 per share price target.