Roth Capital Maintains Neutral On Pacific Sunwear Following Second Quarter Results
In a research note issued today to investors, Roth Capital analyst Dave King maintained coverage on Pacific Sunwear (PSUN) with a Neutral rating and reduced his price target to $2.25 (from $3.00), following the company’s second-quarter results posting core EPS of ($0.03), in-line with preliminary results released on July 31.
King noted, “2Q14 results matched preliminary results, but PacSun posted its weakest comp in 10 quarters and 3Q14 EPS guidance fell short due to weaker margin trends. Still, sales trends improved throughout the quarter and management noted a positive response to initial fall assortments amidst a down-trending denim cycle. Our Neutral rating reflects PSUN’s progress toward profitability, but our concern that a successful turnaround requires much stronger revenue growth and gross margin improvement.”
The analyst explained his new price target saying, “We are lowering our price target from $3.00 to $2.25, which assumes a roughly 0.30x (previously 0.35x) EV multiple on our 2014 Sales estimate.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Dave King has a total average return of 5.4% and a 51.6% success rate. King has a average return when recommending PSUN, and is ranked #1217 out of 3266 analysts.