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Idera Pharmaceuticals, Inc. Message Board

  • vulturefeathers vulturefeathers Aug 28, 2014 10:30 AM Flag

    JC Penney: When a Downgrade is a Vote of Confidence

    By Ben Levisohn

    BTIG’s Will Frohnhoefer explains why his downgrade of JC Penney (JCP) to Neutral from Buy doesn’t mean he fears for the retailer’s future:


    We believe that the recent performance of JC Penney’s shares validates our original thesis: that despite the severe damage inflicted on the firm by the Johnson administration, JC Penney had the capital resources to avoid a bankruptcy filing and to preserve equity value…

    …JC Penney was able to fulfill our checklist of catalysts: a repositioning of inventory in time for the critical holiday season; a pacification of their suppliers; significant improvement in gross margins as their private brands returned to pre-Johnson levels; breakeven cash flow; and a return to sales growth…

    Our move to neutral does not mean that we doubt that JC Penney will hew to the right path going forward, or that it will stop improving its sales and margins. It is simply based on valuation: JC Penney has achieved an 8.5x enterprise value multiple to our FY2016 forecast, which we believe values it fairly in relation to its competitors for now.

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