UPDATE 1-Wedbush raises Parlux to buy; shares rise

(Recasts, changes source, share movement)

Aug 26 (Reuters) - Wedbush Morgan Securities upgraded Parlux Fragnances (PARL.O) to "buy" from "hold" on strong initial response to the perfume maker's new Jessica Simpson fragrance, and Parlux' shares rose to a 52-week high.

"We believe the success of Jessica Simpson may potentially lead to expanded distribution for Parlux' two major existing fragrances, Paris Hilton and Guess," analyst Rommel Dionisio wrote in a note to clients.

Department store operator Macy's Inc (M.N) expects Jessica Simpson to be a top ten fragrance this year, while Dillard's Inc (DDS.N) has decided to carry the perfume brand, despite never having sold a Parlux fragrance before, Dionisio said.

Dillards has indicated to Parlux that it may add Guess and Paris Hilton lines to its stores, depending on the success of the Jessica Simpson launch, added Dionisio, who raised his price target on the stock to $8.00 from $4.50.

The analyst said Parlux, whose first-quarter sales had been hurt by an inability to fulfill retailer orders on Guess fragrances, is now catching up with order flow.

Dionisio raised his fiscal 2009 earnings estimate for Parlux to 30 cents a share from 28 cents and revenue estimate to $173.4 million from $167.4 million.

Shares of the Fort Lauderdale, Florida-based company were up 33 cents at $6.98 in morning trade on Nasdaq. They touched a 52-week high of $7.15 earlier in the session. (Reporting by Arup Roychoudhury in Bangalore; Editing by Himani Sarkar)