Sterne Agee analysts upgraded their rating on the Manhattan Beach, Calif., company to "Buy" from "Neutral" and raised its profit and revenue outlook for 2009 and 2010.

Skechers last week reported a second-quarter loss as demand for its trendy sneakers remained weak, but the company said margins improved in June and it expects to return to profitability in the second half of the year

Analyst Sam Poser said in a research note that the company's new "Shape Ups" line, which are designed to provide a workout from wearing, hit the market recently and are selling through at a double-digit rate. For the first time in memory, Poser wrote, demand is outstripping the company's inventory. Skechers plans to expand the line soon.

He is also anticipating some growth in the company's children's shoe business.

Sterne Agee has a 12-month price target of $20, saying Skechers should be improving its margins and its top-line growth. The analysts also raised their 2009 earnings estimate to 42 cents per share from 24 cents per share and 2010 estimate to $1.02 per share from 73 cents per share.

Sterne Agee raised its revenue estimates for 2009 to $1.34 million from $1.29 million and 2010 estimate to $1.46 million from $1.38 million. However, they deemed the move "conservative" as they anticipate no growth in the core Skechers' business.

Skechers shares rose 37 cents to $15.17 in afternoon trading.

A service of YellowBrix, Inc.