Wall Street Strategies Reiterates Sell Rating on Pacific Sunwear (PSUN)

Wall Street Strategies is out with a research report this morning, where it reiterates its Sell rating on Pacific Sunwear of California Inc. PSUN; it has a $4.00 price target on the stock, down from $5.00. The WSS analyst, Brian Sozzi, cited the company's “disastrous” holiday season, after which PSUN had to adjust Q4 2010 guidance lower to reflect a greater than planned net loss. The analyst continues to believe that PSUN stores have too much inventory and too much discounting, owing in part to a poor start to the season. The analyst said, “We believe the overall situation at Pacific Sunwear is nearing danger status, as increased net loss projections for FY11 begin to call into question the chain's liquidity. At some point in the not too distant future, suppliers may start to withhold shipments out of fear of non-payment. Strong action needs to be taken by management, and the first step should be to aggressively close underperforming stores.”