Analysts’ Opinions Are Mixed on These Services Stocks: Entercom Communications (NYSE: ETM) and JC Penney (NYSE: JCP)

By Jason Carr

Analysts have been eager to weigh in on the Services sector with new ratings on Entercom Communications (ETMResearch Report) and JC Penney (JCPResearch Report).

Entercom Communications (ETM)

In a report released today, Zachary Silver from B.Riley FBR maintained a Buy rating on Entercom Communications, with a price target of $5.75. The company’s shares closed last Monday at $3.59, close to its 52-week low of $2.94.

Silver commented:

“We are updating our estimates for Entercom (ETM—Buy, $5.75 PT) following last week’s 2Q19 earnings results, after which the company promptly lost more than a third of its equity value. Revenue and AEBITDA estimates came in well short of guidance, and ETM announcing that it was spending $40M to accelerate its entree into a competitive podcasting landscape likely amplified investor frustrations. That said, while we are reducing forward estimates significantly, our updated outlook for the long-term cash flow trajectory of this business is not severe enough to justify the 32% drop in ETM’s equity value since the August 7 pre-open report. We now model close to zero revenue growth in the core ETM business.”

According to TipRanks.com, Silver is a 1-star analyst with an average return of -1.8% and a 41.9% success rate. Silver covers the Services sector, focusing on stocks such as Liberty Media Corporation Series C Liberty Formula One, Nexstar Media Group Inc, and Sirius XM Holdings Inc.

Entercom Communications has an analyst consensus of Moderate Buy, with a price target consensus of $5.75.

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JC Penney (JCP)

B.Riley FBR analyst Jeff Van Sinderen initiated coverage with a Hold rating on JC Penney today and set a price target of $0.60. The company’s shares closed last Monday at $0.58, close to its 52-week low of $0.53.

Van Sinderen noted:

“JCP reported 2Q results BMO on 8/15. Sales/comps were below consensus while GM/AEBITDA came in above, driven by lower permanent markdowns, improved shrink, increased store and online selling margins, and the exit of major appliance and in-store furniture categories. Non- clearance and clearance selling margins were up and clearance selling margins were positive msd for both stores and online. Comps started especially soft in May with headwinds from weather and continued to improve through June and July. Fine jewelry, women’s apparel, men’s apparel, and footwear outperformed while home, women’s accessories, and boys and girls apparel underperformed. Fine jewelry strength continued with positive comps.”

According to TipRanks.com, Sinderen has 0 stars on 0-5 star ranking scale with an average return of -4.5% and a 40.0% success rate. Sinderen covers the Consumer Goods sector, focusing on stocks such as Universal Electronics, Celsius Holdings Inc, and Chromadex Corp.

JC Penney has an analyst consensus of Hold, with a price target consensus of $1.05.

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