(RTTNews) - Tuesday, FBR Capital Markets upgraded Pacific Sunwear of California Inc. (PSUN: News ) shares to Outperform and increased its price target to $9 from $6. The brokerage narrowed its 2009 loss per share estimate to $0.60 from $0.64, and its 2010 loss estimate to $0.15 from $0.19.

Analyst Adrienne Tennant upgraded the stock based on product focus returning to an emphasis on brands, controlled inventory, guidance and consensus that she believes could be sufficiently conservative, and opportunities in the company's store base to close underperforming stores.

With a new CEO, easier compares in second half of 2009, and new brands that could attract an incremental customer, the analyst believes deep-value investors should begin to look at PSUN. However, it was clear that many of the initiatives of the past 12 to 18 months would be reversed, including a deeper penetration of branded product, reintroduction of footwear and accessories, and returning to the company's core heritage brands.

The analyst believes uncertainties remain, and is early to the fundamental turn in the name. Nonetheless, the analyst believes downside in shares is limited, and believes deep-value investors are likely to support the stock at or close to current $6 levels, as there is potential for open-ended upside if she begins to see improving top-line trends.
Due to the analyst's belief that the quarter is sequentially improving, she is increasing third quarter of 2009 comp estimate to down 17% from down 20.5%, and loss per share to $0.15 from $0.19.

Currently, PSUN is up $0.53 or 8.63% and trading at $6.67.

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by RTT Staff Writer

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