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How Wall Street Rates JCPenney Stock prior to Q1 Results

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Analysts’ recommendations

JCPenney (JCP) stock currently doesn’t have a “buy” recommendation from any analysts covering the stock, given its persistent weakness. As of May 16, JCPenney stock was rated a “hold” by ten analysts while four analysts had a “sell” recommendation.

JCPenney stock was up 14.4% on a year-to-date basis as of May 16. The 12-month average price target of $1.42 for the stock reflects an upside of about 19% compared to the closing stock price on May 16.

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Efforts to improve performance

JCPenney is streamlining its operations and closing down unprofitable stores. The company aims to shut down 18 full-line stores and nine ancillary home and furniture locations in fiscal 2019. To reduce markdowns and improve its margins, the company is focusing on better inventory management. JCPenney is also trying to bring down shrink rates to improve its gross margin.

The company recently exited its lower-margin appliances business to focus more on higher-margin categories such as apparel and soft home furnishings. Within apparel, the company is paying attention to activewear, special sizes, and women’s dresses.

JCPenney is also to continue investing in its omnichannel capabilities to enhance the consumer shopping experience.

However, intense rivalry from online retailers and off-price players—as well as a significant debt burden—might make the company’s recovery more challenging.

JCPenney is scheduled to announce its results for the first quarter of fiscal 2019 on May 21. Analysts expect the company’s adjusted loss per share to widen to $0.38 in fiscal 2019’s first quarter from $0.22 in fiscal 2018’s first quarter as revenue is expected to fall 4.3%.

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