Why J.C. Penney (JCP) Is Gaining Today

NEW YORK (TheStreet) -- J.C. Penney (JCP) was gaining 9.3% to $9.20 Tuesday after Citigroup (C) upgraded to retailer to "buy" from "neutral."

The bank also raised its price target for J.C. Penney to $11 from $7.50. Analysts Oliver Chen, Maryana Pleskanka, Nancy Hilliker, and Vivien Azer called the company an "American comeback story," saying the can continue to turn around sales. The analysts believe focusing on the home and kids departments will help the retailer.

According to the analysts J.C. Penney can drive comp and healthier margins through "(1) home department which is ~12% of mix and had severe space/product disruptions in 1H13; a revamped Home Collections at JCP has better price/value, renewed focus on bedding/bath/small electrics & decorative accessories; (2) fixing kids (~12% of mix), which was disrupted in 2H13 given space allocation to ideas which did not resonate; (3) fixing the mix of private, exclusive, & national brand merchandise that better resonates with the JCP customer (private brands ~30% under Johnson vs. ~50% historically, & have 400-500bps benefit vs. national brands). If 20% of JCP's business mix (home and kids ~20-25% of total) can comp +20% this yields a 5% benefit."

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TheStreet Ratings team rates PENNEY (J C) CO as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

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