Hot Topic's Relief Bounce

Updated from 8:23 a.m. EDT

Shares of specialty retail chain Hot Topic(HOTT Quote) 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. ...