Market Loses Its Religion for True Religion

(Updated with analysts' commentary.)

NEW YORK (TheStreet) -- True Religion(TRLG Quote) is tumbling in afternoon trading, after the premium denim maker posted a quarterly profit that missed expectations and was downgraded.

Shares of the company are down 18.4% to $21.66, giving up the 14% gains they have achieved since September.

True Religion, however, still raised its full-year outlook to $1.82 to $1.86 a share, up from an earlier estimate of $1.76 to $1.84 a share.

During the quarter, True Religion earned $14.1 million, or 58 cents a share, down 9% from $15.4 million, or 64 cents, in the year-ago period. Analysts expected the company to earn 59 cents a share.

Revenue rose 4% to $82.4 million but still missed Wall Street's consensus of $85 million

Prior to the earnings release Lazard Capital Markets analyst Todd Slater downgraded the stock to hold from buy, along with several other retailers. He said True Religion has been more focused on lowering expenses than on higher sales.

"We recommend investors move to the sidelines, awaiting a more attractive entry point driven by either decreased valuations or increased 2010 visibility," he wrote in a research note.

But Brean Murray Carret analyst Eric Beder disagrees. "Frankly, we think this reaction is highly short-sighted and we should use any weakness to become more aggressive in the name," he wrote in a research note. "We believe the company's estimates remain conservative and that True Religion is now even better positioned to ignite material top- and bottom-line growth."

-- Reported by Jeanine Poggi in New York

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