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.

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