Oppenheimer Downgrading Pacific Sunwear

Oppenheimer & Co. is out with a research report on Pacific Sunwear PSUN and is downgrading shares to Perform from Outperform. In a note to clients, Oppenheimer & Co. writes, "Lowering rating to Perform. While encouraged by 2Q results (above consensus EPS of $(0.18) on a 1% comp and 7% decline in inventories), we're concerned that 3Q is off to a below-plan start and that this indicates a broader issue. PSUN has made great strides, but given the promotional environment, its improvements may be overshadowed by the competition. In addition, although inventories have been planned conservatively, PSUN's stores are caught in a reactionary mode, following the lead of more established teen retailers. Given what we expect to be significant 2H promotional headwinds, we step to the sidelines, awaiting a more normalized environment. Removing $6 price target." Shares of PSUN are down 27 cents in pre-market trading to $1.90.