Analysts at Baird released a research note today, increasing the target price on J.C. Penney Company Inc. (NYSE:JCP) stock following strong financial results for the fourth fiscal quarter of 2015, published in the previous week.

The analysts believe that the company’s earnings results for the quarter were “confidence-inspiring.” JCP reported a 4.1% growth in same store sales for the quarter, along with widening margins. In addition to this, the retailer deleveraged its balance sheet as compared to the tough industry conditions. While the Plano, Texas based departmental stores operator has more “low hanging fruit” in comparison to its peers in the industry, analysts at the sell-side firm believe it has given the company sharp losses in the previous years. Moreover, according to the analysts, the new management deserves appreciation for putting the company on a better path moving forward and also posting better-than-expected financial results in the recent quarters.

Furthermore, the analysts at the investment firm believe that the risk remains high, as there is a higher amount of leverage coupled with the tough dynamics of the retail sector; however, Baird’s short-term bias continues to be favorable along with a rise in target price on the stock to $11.

The 2016 guidance provided by the management at JCP shows increased confidence in recovery, according to the analysts at Baird. The management issued guidance of $1 billion of EBITDA for 2016, which includes continued progress on same store sales, gross margin accompanied with cost savings. On the earnings call, the officials at JCP struck a confident tone regarding the company’s ability to recover from the set-back. The recovery comes on the heels of sustained margin improvement and bucking industry trend. JCP also looks forward to optimize pricing through the better utilization of data, which would also help to markdown cadence, localize assortments and optimize the supply chain process.

Baird’s $11 price target on JCP stock is based on 5.7-5.8 times 2017 EBITDA. This is a multiple which is near the current department store average as the retailer’s EBITDA travels on the road to recovery.

JCP stock is trading at $9.94, up about 3.60% as of 11:46 AM EST.