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Growth Potential Amid Weak JCPenney Earnings?

JC Penney reported a quarterly loss amid a decline in holiday sales, but one analyst on Friday saw more upside in the retailer’s stock price.

“I don’t care about the fourth quarter,” Macquarie analyst Liz Dunn said on “Fast Money.” “The fourth quarter is old news.”

Dunn said new management — headed by former Apple retail guru and new JC Penney CEO Ron Johnson — was now in place and that their strategy “really took hold in February.”

Significant cost-cutting, she said, supports EPS growth through 2012 and 2013.

Dunn rated the stock a “buy,” with a price target of $47 per share.

The stock traded at $41.63 midday, down 0.7 percent.

Trader Stephen Weiss noted the stock’s high valuation – if not the highest among retailers – and that Dunn’s earnings growth was almost double Wall Street consensus.

Dunn added that her price target doesn’t factor in robust sales growth, which, if it happens, could add $6 to JC Penney’s share price.

“The beauty of the plan is that the first two years are really carried by the cost savings,” she said.

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Trader disclosure: On Feb. 24, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Najarian is long AAPL call spreads; Najarian is long IBM call spreads; Najarian is long CRM call spreads; Najarian is long SODA call spreads; Najarian is long JCP call spreads; Najarian is long ACI call spreads; Najarian is long FIO call spreads; Najarian is long UTX call spreads; Weiss is long EUO; Weiss is long WLP; Weiss is long QCOM; Weiss is long CHK; Weiss is long HK; Weiss is long KEG; Weiss is long VZ; Weiss is long MDRK; Weiss is short ANR; Weiss is short MT; Weiss is short AAPL puts

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