J.C. Penney: No Bankruptcy; Target $10 On Short Covering
seekingalpha.com/article/...ruptcy-target-10-on-short-covering
No bankruptcy for JC Penney (JCP) in 2014. A meager 2% increase in same-store sales, a 460-basis-points jump in gross margin, and a small profit, have convinced many investors that JCP has snapped a streak of deteriorating financial results, jettisoning the stock 32.6% higher after the beleaguered retailer reported earnings on Wednesday.
JCP "recognized a tax benefit of $270 million primarily related to gains resulting from the annual re-measurement of the pension plan," according to the statement, a one-time adjustment that put the retailer in the black for the quarter.
In addition to $2 billion in liquidity posted for the fourth-quarter, CEO Myron Ullman shocked investors with regard to liquidity, which, he stated, is "expected to be in excess of $2 billion at year-end."
That all-important and closely-watched guidance implies a self-funded operation at JCP in 2014, which also implies that JCP no longer needs access to its credit facility's $400 million accordion feature.
"Now the risk looks much lower, because people were convinced, at least the short were . . . convinced, that these guys were going to go broke or had to recapitalize the business somehow," former senior vice president of May Department Stores, Jan Kniffen, told CNBC on Thursday. "And now it doesn't look like it."
That's "aggressive" guidance, said Morgan Stanley's Kimberly Greenberg, who maintained her 'sell' rating on the stock and $4 price target.
Aggressive?
Greenberg may be putting it rather mildly, in my opinion; a better word would be "incredible."