ARTnewsletter Archive

Sotheby’s Shares Get a Lift from Analyst Upgrade

Shares of Sotheby’s rose nearly 7 percent in the week after an investment analyst raised his rating of the stock following news of an increase to its buyers’ premium schedule.

NEW YORK—Shares of Sotheby’s rose nearly 7 percent in the week after an investment analyst raised his rating of the stock following news of an increase to its buyers’ premium schedule.

On Jan. 22, Wedbush Morgan Securities analyst Rommel Dionisio upgraded Sotheby’s stock from “hold” to “buy” and raised the share target price from $32 to $40. In January Sotheby’s increased the buyer’s premium on works sold at auction to 20 percent on the first $500,000, and 12 percent on the balance of the price. Previously the commission had been 20 percent on the first $200,000.

Dionisio, noting that there is no associated increase in costs, said the rate increase should equate to a roughly 1 percent increase in total auction commission revenue. The benefit “should drop entirely to the operating income line,” he stated in a client note. The price of Sotheby’s shares has ranged from about $19.30 to $38 in the past 12 months. As ARTnewsletter went to press, shares closed at $37.35—up 40 cents, or 1.1 percent, in trading on the New York Stock Exchange.

Christie’s followed suit, announcing on Jan. 30 that, starting Feb. 5, it too will charge a 20 percent buyer’s premium on the first $500,000 and 12 percent thereafter.

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