UPDATE 3-Iconix Q3 strong, tepid outlook pulls shares down

* Q3 EPS $0.31 vs est $0.28

* Q3 rev up 8 pct

* Sees FY10 EPS $1.25-$1.30 vs est $1.34 * Backs FY09 EPS view $1.17-$1.22 vs est $1.19

* Shares fall as much as 9 pct (Adds analyst comments, updates share movement)

By Nivedita Bhattacharjee

BANGALORE, Oct 27 (Reuters) - Iconix Brand Group Inc (ICON.O) posted a strong third quarter, but shares fell as much as 9 percent in heavy volumes as the company's full-year forecast implied that its fourth quarter would narrowly miss market estimates.

"Based on the company's results and forward guidance, it appears that it is continuing to have difficulty sustaining revenue growth," Nick Gibbons, senior analyst at Gradient Analytics, wrote in an email.

Earlier in the day, Iconix, which owns and licenses brands including Candie's, Joe Boxer and Rocawear, said it would buy a 51 percent stake in privately held Ecko brands for $63.5 million.

Without benefits from the Ecko deal, 2010 revenue expectations appear largely flat, analyst Gibbons said.

"My view is currently neutral towards the Ecko deal... the company is associating itself with a brand that is past its prime (similar to the Ed Hardy deal)," he wrote.

Iconix in May bought a 50 percent stake in Hardy Way LLC, the owner of the edgy Ed Hardy brand and trademarks.

The fashion house, several of whose brands are sold at WalMart Stores Inc (WMT.N), Target Corp (TGT.N) and Kohl's Corp (KSS.N), said it expects to earn between $1.25 a share and $1.30 a share in 2010 on an adjusted basis, missing Street estimates of a profit of $1.34 a share.

For 2009, it forecast earnings of $1.17 to $1.22 a share, based on which the company's implied earnings for the fourth quarter would be in the range of 24 cents to 29 cents a share.

Analysts were expecting the company to report earnings of 30 cents a share for the fourth quarter.

STRONG Q3, BUT WEAKNESS AHEAD

For the third quarter, Iconix earned $20.5 million, or 28 cents a share, up from the $16.4 million, or 27 cents a share, it earned in the year-ago quarter.

Adjusting for a new accounting treatment, the company earned 31 cents a share, while analysts were expecting 28 cents a share.

Revenue rose 8 percent to $59.4 million and included a $3.7 million gain related to the sale of Iconix's Joe Boxer brand.

Analysts were looking at revenue of $53.9 million, according to Thomson Reuters I/B/E/S.

Fourth-quarter revenue is expected to be about $51.2 million, going by Iconix's forecast, implying that revenue may decline both year-over-year and sequentially, analyst Gibbons said.

Shares of the company, which touched a low of $12.18, were trading down 7 percent at $12.44 Tuesday afternoon on Nasdaq. (Additional reporting by Shradhha Sharma in Bangalore; Editing by Anil D'Silva, Anne Pallivathuckal)