Zumiez (ZUMZ) Gets Some Zum-Zum On an Upgrade

Zumiez, Inc. (Nasdaq: ZUMZ) is seeing a big move higher today after the company was upgraded to Buy at KeyBanc earlier. Longs are latching onto the positive comments and shorts are running for cover.

In its upgrade, KeyBanc acknowledged that visibility remains limited, traffic remains weak, and improvement in fundamentals is best reserved to the out years, but the firm thinks there are numerous near-term, positive catalysts that could drive additional upside in the shares.

Commenting on the near-term catalysts the firm said, "Near-term catalysts include the possibility of better than expected April comp results (driven by improved weather and the Easter calendar shift) and overall 2009 earnings (driven by 2H09 benefits from improved merchandise margins and store labor). Further, we believe 2010 store growth at the Company could decelerate even further (2009 = 11% vs. 20% long-term goal) and that this would be viewed positively by investors given the importance of capital preservation in this environment. Moreover, if overall retail comps do improve in a meaningful fashion in 2010, earnings growth at ZUMZ should exceed the peer group as the Company's two-year store growth, and hence operating leverage, exceeds that of competitors."

Shares of Zumiez are up 22.8% currently to $11.59. KeyBanc set a $13 price target on the stock.

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