Investment Firm Cuts Estimates on Sotheby’s Earnings

Eliza Osbourne at the Art For Africa Auction for American, African American and African Contemporary Art to Benefit AFRICA FOUNDATION, at Sotheby's, New York City, November 17, 2011. © 2014 Patrick McMullan Company, Inc. All Rights Reserved.

Via Sotheby’s/Facebook.

David Schick, an analyst with brokerage and investment firm Stifel Nicolaus, issued a mixed report on auction house Sotheby’s earlier this week (September 23). While Schick reiterated his “buy” rating on the company stock (which trades on the New York Stock Exchange under the symbol BID), he lowered his price target on the stock from $65 per share to $50. The stock closed at $35.40 a share yesterday, and is currently trading up slightly, at $35.65 a share this morning.

In his report, Schick noted Sotheby’s upcoming series of Hong Kong auctions, and stated: “We think this underscores recent commentary from luxury brands that there’s some incremental deceleration happening in China (there’s been a number of warning signs). Art supply can be quite volatile and it’s difficult to procure consignment when the luxury consumer is delaying new purchases (sellers wait because they don’t think they are getting the best price).”

Schick lowered his earnings per share estimate for Sotheby’s fourth quarter  to “-5 % vs +5%” from the fourth quarter of 2013 “to reflect lower than expected aggregate auction sales.” Schick said Sotheby’s Hong Kong week series of auctions represents about 20 percent of fourth quarter sales.

The outlook for Europe and North America was relatively brighter, with 2014 estimates “supported by better than expected auction results in 3Q14 and we think trends in North America and Europe remain largely unchanged.” Schick added however that the release of Impressionist, modern, as well as contemporary catalogues would provide “a better look” at those markets.

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