Talking Numbers

Is JC Penney’s latest turnaround for real?

Is JC Penney's latest turnaround for real?

JC Penney is taking another stab at a comeback.

The troubled retailer announced Monday it tapped Home Depot executive Marvin Ellison to replace Myron Ullman as CEO. Ellison will join JCPenney's board of directors on Nov. 1, though he won't become CEO until Aug. 1, 2015 when Ullman steps down. This marks the third CEO switch in less than three years.

"We believe [Marvin Ellison] is wellequipped to return the Company to profitable growth," Thomas J. Engibous, chairman of JC Penney's board of directors, said in a statement.

The change-up comes as UBS downgraded JC Penney's stock from "neutral" to "sell" and lowered its price target to $5 per share. The firm cited unrealistic earnings expectations and lack of new merchandise.

Shares of JC Penney have lost 36 percent of its value in the past 30 trading days alone. So, can a new CEO help the retailer get back on its feet?

"I think [Marvin] Ellison is a good choice," said Imperial Capital's managing director Mary Ross Gilbert. "He brings tremendous experience from an operating perspective. He's raised customer loyalty, and he's known for empowering his associates. I think that will really take JCP to the next level."

However, despite Ellison's repertoire, Gilbert does not see the change putting a dent in the company's stock valuation. "We have a $3 [per share] price target on JCP," Gilbert said. "They really have a lot of debt and that's what is constraining their valuation."

According to Oppenheimer's head of technical analysis Ari Wald, the charts show potential for a near-term rally. "The stock has really been beaten up," said Wald, who noted that the stock is the most oversold it's been since the start of the year. "There is fuel for a little bit of a counter-trend move here."

Wald added that in the long-term the stock could continue to trade in a volatile trading range bouncing at $6 per share and hitting resistance at $8.50 per share. "Those are the levels to watch," he said.

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