ARTnewsletter Archive

Sotheby’s Stock Upgraded Amid Brighter Market Outlook

On Dec. 15, financial services and investment firm Wedbush Securities upgraded Sotheby’s stock to “outperform” from “neutral,” and raised its price target to $28 from $15.

NEW YORK—On Dec. 15, financial services and investment firm Wedbush Securities upgraded Sotheby’s stock to “outperform” from “neutral,” and raised its price target to $28 from $15.

According to a report by Wedbush analyst Rommel Dionisio, “rising global demand, better-than-expected recent auction results and positive feedback from industry contacts point to meaningful recovery next year in the global art auction market.” The report continues, “Though major fall 2009 auctions still suffered from a lack of supply, those art works that were brought to market did sell extremely well, most at the high end of their pre-sale estimates.” Dionisio also noted strength in several major art categories, from Chinese and Russian art to Old Masters, Impressionist and modern art and contemporary art, citing greater demand from around the world.

In its recent earnings report for the third quarter, ended Sept. 30, Sotheby’s reported revenues of $44.9 million, a drop of $31 million, or 41 percent, from the third quarter of last year. The house said the decrease was primarily due to an 80 percent decline in net auction sales as a result of the change in the timing of the summer London contemporary sales, which moved from the third quarter last year to the second quarter of this year.

As ARTnewsletter was published, Sotheby’s stock was trading at $23.46 per share on the New York Stock Exchange. The auction house’s share price has been on the rise, from $19 at the beginning of this month.

On Dec. 16, investment firm Stifel Nicolaus announced it had initiated coverage of Sotheby’s. According to Stifel Nicolaus’s report, the stock “could potentially be seen as attractive to the truly long-term investor. We believe the art market may show mixed signals and we are looking for a steeper discount to the decade range mid-point of $25–$35 and thus initiate with a hold rating.”

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