Shares of Anaheim-based Pacific Sunwear of California Inc. got a boost on Wednesday after an analyst upgraded the company’s stock, saying the struggling retailer will likely stay in business.

The company’s stock rose 4% in midday New York trading before closing down 2% on a market value of about $90 million. The stock was up about 4% in afterhours trading.

The jump in Pacific Sunwear shares came after Citi Investment Research analyst Kimberly Greenberger upgraded the company’s stock from to “hold” from “sell.”

In a note to investors, Greenberger said that Pacific Sunwear is expected to stay in business because it has “sufficient liquidity."

The company is expected to survive because it will end 2008 with $20 million in cash and won't have to tap a $150 million credit line that runs through 2013, Greenberger wrote.

Pacific Sunwear, which has seen its stock fall about 90% for the year, does not yet warrant a “buy” rating because the company still has challenges in improving sales and profitability, Greenberger wrote.

"For now, we believe Pacific Sunwear is likely to survive given its cash generation profile,” Greenberger wrote. “But we do not have catalysts for improving sales/profitability despite compelling merchandise appearance.”

Pacific Sunwear, which runs some 940 mall stores and outlets, has been working on a turnaround for more than a year after closing a shoe store chain and stores selling urban-style clothing.

The upgrade came a day after Pacific Sunwear reported a slim quarterly profit before charges of $649,000 for the three months through November 3.

Pacific Sunwear, which continues to generate sales amid weak economic conditions, warned about the current quarter in a conference call yesterday.

The company expects a loss of $1.9 million to $5.2 million for the three months through January, versus a profit of $4.5 million expected by analysts.