Shares of bebe stores, inc. (NASDAQ: BEBE) are sharply are higher Friday after posting a smaller-than-expected loss in the third quarter. Now analyst see the new strategy as on the right track.

Janney Capital analyst Adrienne Yih-Tennant noted marked solid improvement in the company’s new turnaround strategy, although she stopped short of upgrading the stock and maintained Neutral rating.

"We believe FY1Q15 marked solid improvement in the company’s new turnaround strategy; however, we choose to remain on sidelines until we see further evidence of customer reception to new product and marketing initiatives, which could take 6 to 12 months to fully materialize," Yih-Tennant said. "We remain Neutral on shares of BEBE until we see 1) a stabilization of the demand environment for women’s apparel, 2) sustainable positive comp performance, and 3) continued discipline in inventory management and cash use."

The firm is raising FY2Q15 net loss per share to ($0.02) from ($0.09).

For an analyst ratings summary and ratings history on bebe stores, inc. click here. For more ratings news on bebe stores, inc. click here.

Shares of bebe stores, inc. closed at $2.20 yesterday.