J.C. Penney (JCP) is sinking after UBS analyst Michale Binetti downgraded the stock to Sell from Neutral and slashed his price target on the shares to $13 from $21 in a note to investors earlier today. The retailer's earnings outlook is deteriorating, and there are signs that its cash flow is reaching distressed levels, the analyst believes. In order to adopt a new turnaround plan that will have credibility with investors, J.C. Penney will have to significantly reduce its profitability in the medium term, Binetti wrote. The retailer's decision to lower its prices on some products in the fourth quarter increases the likelihood that the company's fourth quarter earnings per share will miss expectations, the analyst believes, adding that the Street's profitability estimates for the company will probably decline. In mid-morning trading, J.C. Penney retreated 88c, or 4.60%, to $18.27.