D A Davidson Previews Pacific Sunwear Of California's Third Quarter

will report its third quarter results after market close on Wednesday, December 3. Analysts are expecting the company to lose $0.04 per share on revenue of $208.0 million. In a note to clients on Tuesday, Andrew Burns of D A Davidson projected the company will lose $0.05 per share on revenue of $206.8 million. The analyst also expects the company to report comps of 1.0 percent, lower than the Street's estimate of 1.8 percent. In addition, Burns expects the company to report a gross margin of 25.8 percent, representing a 67 basis point improvement from the same quarter a year ago while SG&A expenses are expected to rise two percent from last year to $55.0 million. Looking forward to the fourth quarter, the analyst notes that the company is operating in a “more favorable backdrop” with two extra shopping days, lower gas prices and lower unemployment. As such, the company could show a year over year improvement in the fourth quarter. “Overall, we believe Pacific Sunwear of California has made the right merchandise, brand and store environment changes in recent years to gain market share at the mall,” Burns wrote. “We believe this will be increasingly evident in quarterly reports as we move into 2015.” Shares are Buy rated with a 12-18 month price target of $3 and a five-year target of $5.