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Lehman Brothers upgraded JC Penney (JCP
) to strong buy from buy.
Analyst Jeff Feiner says EBITDA valuation for Eckerd indicates the drug store business is worth more than JC Penney's current overall stock price. Also, he sees an improving competitive position for department stores over the longer term. He raised his $0.30 fiscal 2002 (Jan.) EPS estimate to $0.35, and raised the $0.65 fiscal 2003 to $0.75. He notes CEO Allen Questrom's goal to grow EBIT at both drug and department stores to 4.5% and 6% of sales over the next three to five years, respectively, through merchandising and cost controls. Feiner has a $33 12-month price target ($25 for Eckerd, and a conservative $8 for department stores).