JC Penney to rally 26 percent on Trump's 'middle-class spending resurgence,' Bank of America says

A shopper browses clothing at a JC Penney store in Queens, New York.
Michael Nagle | Bloomberg | Getty Images

Bank of America on Friday upgraded J.C. Penney to buy from neutral, predicting an inflection point in earnings and cash flow as the retailer broadens its product offerings, and reaps of the benefits of a "middle-class spending resurgence" under President-elect Donald Trump.

"We think JCP will drive industry-leading same store sales growth, primarily due to moves into nonapparel categories, and margin improvement as it fixes legacy supply chain issues," equity analyst Lorraine Hutchinson wrote in a research note.

"An economic resurgence in the middle class under the Trump administration would provide upside to our outlook," she said.

After treading water for five years, shares of J.C. Penney have surged 48 percent in 2016, positioning the stock for its best yearly gain since 2004.

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