J.C. Penney Company, Inc. (NYSE:JCP) shares fell into a downward spiral today, declining as much as 9%. The embattled retail chain reported 10% comparable store growth, which still wasn’t good enough for investors and analysts worried about whether it can orchestrate a turnaround. Morgan Stanley analyst Kimberly C Greenberger and her team continue to view the company in a negative way because of their expectations for cash burn.

J.C. Penney JCP

J.C. Penney’s November numbers not as good as at first glance

The Morgan Stanley team continue to believe that J.C. Penney Company, Inc. (NYSE:JCP) may not be able to become profitable again. They expect to see deceleration in December and January and note that the 10% year over year increase in November wasn’t as good as it looked on the surface because of how bad last November was for the retailer.

They note that last year J.C. Penney saw sales fall 35% because of Hurricane Sandy, lacking promotions and not opening until 6 a.m. on Black Friday. They find the fact that sales only gained 10% this year to be a problem. They also note that comparing last January’s sales with next month’s sales will be difficult because the retailer saw better comps last year due to increased clearance.

J.C. Penney estimated to gain 6% sales this quarter

The analysts are estimating now that J.C. Penney Company, Inc. (NYSE:JCP) will gain 6% in fourth quarter same store sales. They believe December 2012’s comps were in line with expectations, November was worse and January was better. If this trend continues this year, they’re expecting a deceleration in December and January comparable store sales.

With a 30% gross margin and $50 million SG&A savings year over year, their estimating a loss of 81 cents per share for the December quarter.

Cash burn still a problem for J.C. Penney

They also note that cash burn is still a big issue for J.C. Penney Company, Inc. (NYSE:JCP). They believe the retail chain is in a disadvantaged position compared to other retailers. Under their estimates, they see the company as remaining in the negative on EBITDA until 2015 and on free cash flow until 2017.

The analysts reiterated their Underweight rating and $6 per share price target.