AP News

Analyst upgrades Wet Seal on recent moves

NEW YORK (AP) — A Roth Capital Research analyst upgraded her rating on Wet Seal Inc., citing the teen retailer's termination of its shareholder rights plan, the addition of two board members and a reduction in director compensation.

THE OPINION: Although a turnaround is still several weeks out, analyst Elizabeth Pierce said her confidence level has "increased dramatically" as a result of the recent moves. She also noted that the company's balance sheet remains solid.

She raised her rating to "buy."

Wet Seal had adopted a shareholder rights plan in August, aimed at protecting itself from an unwanted takeover attempt. The rights plan was set to run through June 30, 2013.

The retailer said Thursday that it was getting rid of the rights plan based on feedback from shareholders and the board's confidence that its stock price is stabilizing. It also said it would consider adding another two directors nominated by an activist investor.

Last month Wet Seal hired the firms Guggenheim Securities LLC and Peter J. Solomon Co. to act as financial advisers on a variety of issues, including shareholder value. The board also formed a three-member committee to make recommendations on spending and ways to boost shareholder value.

THE STOCK: Shares of Wet Seal rose 9 cents, or 2.7 percent, to $3.20 in midday trading. They are up from a 52-week low of $2.42 per share in late July. Its shares traded as high as $5.01 almost a year ago.

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