J.C. Penney's Stock Rallies After Morgan Stanley Upgrades Following Years Of Being Bearish

By Tomi Kilgore Markets MarketWatch Pulse

Shares of J.C. Penney Co. Inc. climbed 1.1% in morning trade Monday, after Morgan Stanley backed off from the bearish stance it had on the discount department store chain for the past several years. Analyst Kimberly Greenberger upgraded J.C. Penney to equal weight from underweight, saying the risk-vs.-reward scenario has become more balanced, given several potential catalysts that could boost the stock. Among those catalysts are the eroding financial position of rival Sears Holdings Corp. [: shld], accelerated store closures, continuing debt paydowns and an expected lowered guidance on the fourth-quarter call next week and the analysts meeting in March. The reason lowered guidance is good for the stock: "All in, the investment community should welcome a lowered bar vs. prior out-year financial targets that may limit future financial forecast misses and hence provide a potential positive catalyst for the stock," Greenberger wrote in a note to clients. The stock has tumbled 21% over the past three months, while Sears' stock has plunged 46%, the SPDR S&P Retail ETF has slipped 1.3% and the S&P 500 has gained 7.4%.

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