J.C. Penney Company, Inc. (NYSE:JCP)’s failure to provide detailed information about holiday sales has already convinced most people that the retailer has lost its November momentum, raising serious questions about its turnaround efforts. Now Goldman Sachs Group Inc (NYSE:GS) is piling on, changing its price target from $9.50 to $7 (currently $7.17), roughly in line with consensus.

Goldman rates J.C. Penney as neutral

“Given the company has been lapping far easier comparisons than peers with substantial changes implemented in marketing and merchandising, underperformance raises questions about momentum into next year and weakens the bull case,” writes Goldman Sachs analyst Stephen Grambling, who rates the company as Neutral. “As a result, our FY13/FY14/FY15/FY16 EPS estimates move to ($5.85)/($2.78)/($2.00)/($1.11) from prior ($5.64)/($2.20)/(1.22)/($0.33) to incorporate a tougher holiday selling period which we believe weighed on comp sales and gross margin.”

J.C. Penney Company, Inc. (NYSE:JCP) reaffirmed its fourth quarter guidance of sequential and year-on-year same store sales growth (comps), but after a strong November comps could have fallen by as much as 3% in December without pulling the fourth quarter into the red.

J.C. Penney price performance

Grambling was on top of the problems that J.C. Penney Company, Inc. (NYSE:JCP) is facing six months ago, when he warned investors that the company could be heading for bankruptcy, but it has struck some people as odd that research should show see such problems in the same week that Goldman Sachs Group Inc (NYSE:GS) also announced it would underwrite a stock issuance that raised $810 million in cash.

J.C. Penney’s stock issuance subject of an SEC inquiry

That sale is now being investigated by the Securities and Exchange Commission (SEC) because management had indicated during its second quarter earnings call that it had enough liquidity to make it through the holiday season. The surprise stock issuance raised concerns about the firm’s financial health and caused J.C. Penney Company, Inc. (NYSE:JCP)’s stock to drop. Shareholder Alan Marcus sued back in October, but when the SEC’s decision to take a closer look at J.C. Penney’s books is followed by a report with almost no information, investors have to wonder if what they’ve been told about the company’s current cash position is true.

On the other hand, the discrepancy between Grambling’s research and Goldman’s decision to underwrite the now suspect stock issuance could be seen as proof that the firewall between the different divisions within Goldman Sachs Group Inc (NYSE:GS) is intact.