“The last two weeks have been much tougher than we planned,” Johnson added. In response, the company’s stock fell back to trade flat on the day.
Still, Nagel said the company has done well merchandising and creating an inviting shopping experience in its remolded stores, which he said would be key as it tries to gain market share. Nagel has an “outperform” rating and a $30 price target on the company’s shares.
As investors’ negative sentiment begins to evaporate, Nagel said investors have probably started to cover their shorts.
“What I don’t get the sense yet is that investors have really started to take the really big, sizeable long positions in J.C. Penney,” he said. “So I look at that as a positive because I think as the story continues to come together, you’re going to have investors not only covering shorts and becoming less negative but actually start to build positions in the stock and I think that’s what will take us to the next level.”
—By CNBC.com's Katie Little; Follow Her on Twitter@katie_little. Reuters contributed to this article.
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Brian Nagel does not own shares of J.C. Penney.