J C Penney Stock Plummets on Debt Restructuring Reports

Short sellers have been on the winning side of JCP

Jul 19, 2019 at 9:46 AM
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J C Penney Company Inc (NYSE:JCP) is down 10.1% to trade at $0.97 -- heading toward its worst day since Aug. 16 -- after a Reuters report indicated the embattled department store is exploring debt restructuring options. According to the article, JCP has met with lawyers and investment bankers who specialize in restructuring in hopes of avoiding the bankruptcy path taken by fellow retailers Toys "R" Us and Sears Holdings.

Looking closer at the charts, JCP has been stuck in single-digit territory since late 2016. More recently, the shares were down almost 58% year-over-year heading into today's trading, and tagged a record low of $0.80 on May 29. The equity went on to edge back above is year-to-date breakeven level, but today's bear gap puts J C Penney back in the red for 2019.

Against this backdrop, analysts are overwhelmingly bearish on JCP stock, with all 13 in coverage maintaining a "hold" or worse rating. Plus, the average 12-month price target is docked at $1.11 -- a slim 2.8% premium to last night's close.

Elsewhere, short sellers have lined up on the right side of J C Penney stock. The 120.9 million JCP shares controlled by short sellers accounts for almost 40% of the security's float, or almost 13 days of trading. These bears are sidelined today, though, with the equity on the short-sale restricted list.


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