NEW YORK (AP) - Pacific Sunwear of California Inc. likely has enough liquidity to remain a going concern, an analyst said Wednesday, prompting an upgrade of the teen apparel retailer's shares.

The upgrade came a day after the Anaheim, Calif., company said its 3rd-quarter loss narrowed as the company cut costs, but sales fell 5 percent amid a deteriorating economic environment.

Pacific Sunwear also said it expects a fourth-quarter loss on a continued pullback on consumer spending. Retailers such as Pacific Sunwear have been hit hard as consumers cut back on discretionary spending and hunt for bargains.

However, Citi Investment Research analyst Kimberly Greenberger said in a note to investors that Pacific Sunwear's shares — down 90 percent since the beginning of the year — have fallen below her target price and upgraded the stock to "Hold" from "Sell."

Greenberger added the company has "sufficient" liquidity to remain a going concern, and will end 2008 with $20 million in cash and no direct borrowings from a $150 million credit facility that does not expire until 2013.

However, Greenberger said the company did not yet warrant a "Buy" rating.

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

In premarket trading, Pacific Sunwear shares added 5 cents to $1.45.