J.C. Penney Company, Inc. (NYSE:JCP)’s second quarter results are due on Tuesday, and Sterne Agee analysts see a buying opportunity in the decline which resulted from the public brawl between Bill Ackman and the retail giant’s board. They believe the second quarter was an important transition for the company and that a turnaround is imminent.

The sign at the entrance of a J.C. Penney store is pictured in Arcadia

J.C. Penney moving past second quarter noise

Analysts Charles Grom and Renato Basanta issued a report to investors this week with a preview of what they expect to see in J.C. Penney Company, Inc. (NYSE:JCP)’s report next week. Their report was written before reports about Bill Ackman possibly selling his shares came out, and they don’t really mention the fight between him and the chain’s board other than to say that it’s coming to an end.

They believe it’s important that investors look beyond the noise that’s been surrounding the company lately and just focus on the turnaround plan set forth by interim CEO Myron Ullman.

Q2 was a transition for J.C. Penney

The analysts note that when the second quarter results come out, investors should see signs of a transition happening. They said it does take time for promotions and advertising to develop, and they expect Ullman to rebase the chain’s inventory.

There have been reports that J.C. Penney Company, Inc. (NYSE:JCP) is having problems with vendor financing, although the retail chain denies these reports. As such, the Sterne Agee analysts believe that concerns about the company’s cash position are overdone. The company has already said it had a cash balance of $1.5 billion at the end of the second quarter, and they said this is consistent with their estimates.

They expect to see $1.18 billion in cash burned during the second quarter, including operating cash use of $644 million and capital expenditures of $535 million. The analysts believe the retail chain has plenty of liquidity in order to turn things around.

J.C. Penney to show signs of recovery in second half

The analysts still expect that J.C. Penney Company, Inc. (NYSE:JCP) will begin showing signs of recovery in the second half. They cite specifically the benefits from promotional pricing, better merchandising, upgraded store experiences and upside from the renovated home department.

They believe that the retail chain will be able to recover some of the $4 billion in sales it lost during the time when Ron Johnson was CEO. They reiterated their Buy rating and $23 per share price target for the stock. Shares of J.C. Penney fell as much a 3 percent on Friday.