Why Pacific Sunwear Shares Jumped

Why Pacific Sunwear Shares Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Pacific Sunwear of California were shining today, gaining as much as 17% after getting an upgrade from Wedbush to outperform, from neutral.

So what: Analyst Betty Chen said the seller of California surf-and-skate apparel is in a position to benefit from the increasing popularity of the lifestyle it projects, additions in its women's line, and improved financials. Chen also bumped up her estimate for this quarter's EPS, to $0.01, from break even, in line with the consensus.

Now what: It's rare to see a stock jump this much on just an analyst upgrade, even for a struggling company such as Pacific Sunwear. The fact that Chen only moved her EPS estimate to match the average shows how weak her endorsement is, and larger peers like Quiksilver continue to struggle, indicating the surf-and-skate look isn't so hot. Shares have already come significantly down from their session highs as the market seems to have overreacted. I'd wait for a more meaningful event before getting behind a company losing money with no particularly bright prospects.

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The article Why Pacific Sunwear Shares Jumped originally appeared on Fool.com.

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