This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Hot Topic's Relief Bounce

Updated from 8:23 a.m. EDT

Shares of specialty retail chain Hot Topic (HOTT) surged Thursday as investors breathed relief that the company did not once again lower its forward earnings forecasts after reporting a drop in second-quarter profits Wednesday night.

Analysts say the upbeat tone of the company's post-earnings conference call, management's realistic view on the back half of 2004 and the overall credibility of the company's management team are also boosting the stock's price. The gain comes despite Hot Topic's just-reported quarterly results that only matched analysts' somewhat subdued expectations as well as the company's own reduced estimate.

The shares were recently up $1.39, or 9.6%, to $15.88. In Wednesday trading, the shares lost 4.1% to close the session at $14.49.

"Someone out there yesterday basically intimated that the [forward] estimates have to come down in the back half of the year, and that put some pressure the stock [Wednesday]," said Liz Pierce, an analyst at Sanders Morris Harris. "What you're seeing today is a getting back to neutral."

Hot Topic said Wednesday that second-quarter earnings tumbled more than 20% to $4.6 million, or 10 cents a share, from $5.9 million, or 12 cents a share, last year. Sales jumped 18% to $136.3 million. Analysts surveyed by Thomson First Call were forecasting earnings of 10 cents a share on sales of $136.4 million in the 2004 quarter.

The company's subsequent conference call, however, was "a little more positive than negative," said Pierce. (She does not hold shares of the company and Sanders Morris Harris does not do investment banking for Hot Topic.)

Pamela Nagler, an analyst Fulcrum Global Partners, agreed with Pierce about the call's positive tone. For her, the fact that Hot Topic's second-quarter results were in-line with guidance and that the company specifically reiterated its forward guidance are all the more reason to be optimistic. (Nagler does not hold shares of Hot Topic and her firm does not do investment banking for the company.)

The company expects to earn 30 cents to 33 cents a share in the third quarter and 49 cents to 52 cents a share in the fourth quarter. The Wall Street consensus is for 30 cents a share in the third quarter and 48 cents a share in the fourth.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $118.03 -0.71%
FB $105.41 -0.31%
GOOG $748.15 -0.02%
TSLA $229.64 5.22%
YHOO $33.16 0.61%


Chart of I:DJI
DOW 17,813.39 +1.20 0.01%
S&P 500 2,088.87 -0.27 -0.01%
NASDAQ 5,116.1430 +13.3350 0.26%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs