An analyst upgraded J.C. Penney Co. Monday, saying the retailer's valuation and recent sales improvement make shares a good investment.

Deutsche Bank analyst Bill Dreher Jr. boosted his rating to "Buy" from "Hold" and his price target to $46 from $45. The new target implies he expects the stock to rise 25 percent over Friday's $36.88 close.

Sales appear to have improved at the Plano, Texas-based company recently, though it's not clear if this is due to seasonally warmer temperatures or the federal stimulus program, Dreher said.

So far this year, the stock has dipped about 16 percent, compared with a 10 percent drop in the S&P 500.

"We recommend purchase of J.C. Penney shares as a value story, with a compelling risk/reward profile," he said in a note to clients.

Dreher boosted his fiscal 2008 earnings estimate to $3.33 from $3.32 per share. Analysts polled by Thomson Financial expect, on average, earnings of $3.28 per share for the year.

A company representative was not immediately available for comment.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.