J C Penney Company Inc Stock Falls On Downgrade

J C Penney Company Inc (NYSE:JCP) is trading lower today after analysts from several research firms downgraded their rating/price target for its stock.

During the pre-market trading, the shares of the company declined 2.88%. The stock is trading $7.54 per share, down by 1.31% at the time of this writing, around 12:49 in the afternoon in New York.

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J C Penney Company 3Q sales outlook

During its Analyst Day meeting, J C Penney Company Inc (NYSE:JCP) reduced its comparable-store sales outlook for the third-quarter fiscal 2014. The retailer is now expecting a low-single-digit growth in comparable-store sales, down from its previous estimate of mid-single-digit growth.

J C Penney Company Inc (NYSE:JCP) explained that the lower-than-expected sales last month combined with difficult retail environment prompted its management to reduce its third-quarter sales estimate.

Analysts’ recommendations

Maxim Group analyst Rick Snyder downgraded his rating for the shares of J C Penney Company Inc. (NYSE:JCP) to Sell from Hold with a price target of $4.00 per share. Snyder suggested that the retailer will experience difficulty meeting its sales expectation due to increased competition.

Snyder commented that the company” delivered an overly optimistic outlook” over the next three years. He said, In the current promotional environment, we believe that the company’s forecast of $14.5 billion in revenues, which equates to a 5.6% compound annual comp rate (CACR) from our 2014 $12.3 billion estimate in 2014, is too optimistic in what we expect to be a promotional time period.”

On the other hand, analysts at Buckingham Research maintained their Neutral rating for the shares of J C Penney Company Inc (NYSE:JCP). They reduced their price target for the stock to $8.00 from $9.00 per share.

Craig Hallum analysts downgraded their rating for the shares of J C Penney Company Inc (NYSE:JCP) from Hold to Sell with a price target of $10.00 per share. Meanwhile, Goldman Sachs analysts cut their price target for the stock to $6.00 per share.

J C Penney growth initiatives

J C Penney Company Inc (NYSE:JCP) outlined its growth initiatives over the next three years during its Analyst Meeting in New York City last Wednesday, October 8.

Some of its growth initiatives include developing its e-commerce to focus on mobile to demonstrate its digital leadership, establishing an enterprise-wide inventory network and revitalizing the highest traffic area in its stores. The company also plans to improve the productivity of its home store with value-drive products and a tailored promotional strategy.

“I am confident that the initiatives we are putting in place will fuel new growth and earn greater customer loyalty as we pursue our vision to become the preferred shopping choice for Middle America,” said J C Penney CEO Mike Ullman.