J.C. Penney Company Inc.’s (JCP) Confidence in Gross Margin Expansion Plans Leaves Piper Jaffray Cautiously Optimistic


After hosting a discussion with J C Penney Company Inc (NYSE:JCP) CEO Marvin Ellison at Piper Jaffray’s 37th Annual Consumer Conference, Piper Jaffray analyst Erinn Murphy sees reason to be cautiously optimistic on the retailer, even as other department store retailers are on an uphill battle to reach gross margin targets. Sidelined predominantly on e-com rivalry, the analyst reiterates a Neutral rating on shares of JCP with a $5 price target, which represents a just under 4% increase from where the stock is currently trading.

Murphy asserts, “Management spoke confidently about their gross margin expansion plans of 20-40 bps for the year (despite what other dept stores are seeing). The Home Refresh category helped offset weakness in apparel to help assist in posting positive comps not only in April but also in May. Management believes Q2 will be a significantly better quarter than Q1, as they have made traction on some specific initiatives to address apparel while seeing improved traction within their home refresh (100 new appliance doors in May). While apparel is still planned down, the company is optimistic about potential improvement in the 2H of the year as a result of improved private-label initiatives while going deeper in athletic & athleisure. The company remains focused on combatting e-com threat with penetration of furniture, appliances, Sephora & salon services.”

As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, Erinn Murphy is ranked #4,362 out of 4,578 analysts. Murphy has a 46% success rate and faces a loss of 5.6% in her annual returns. When recommending JCP, Murphy earns 0.0% in average profits on the stock.

TipRanks analytics show JCP as a Hold. Based on 8 analysts polled by TipRanks in the last 3 months, 1 rates a Buy on J C Penney stock, 6 maintain a Hold, while 1 issue a Sell on the stock. With a return potential of 15%, the stock’s consensus target price stands at $5.57.