Earnings Preview: Sotheby's

Sotheby's (BID) is expected to report Q3 earnings after market close Friday, November 7, with a conference call scheduled for 4:45 pm ET.

Guidance

Analysts are looking for a loss of (16c) on revenue of $126.31M. The consensus range is (25c) to 12c for EPS, and revenue of $110.2M to $156.9M, according to First Call. Less than impressive prices at September's London auctions suggested that the art market boom was final ended by the financial meltdown. Between the faltering economy, soaring food and gas prices, limited credit, slumping home prices and worries about jobs, shoppers remain unnerved and have cut back spending on discretionary items.

In a September interview, Sotheby's CEO William Ruprecht said "there's no question" that some buyers are not willing to pay as much as before, but said "there's also no question that there's an awful lot of interest in important works of art." Sotheby's stock is down 83% from the same period last year. Many analysts believe this month will help interpret the state of the art market, as both Sotheby's and Christie's hold in New York important modern and contemporary art sales.

Analyst Views

Given the deteriorating global art market, Wedbush Morgan reduced its FY09 outlook for EPS to $1.84 from $2.46 and revenue to $790M, down from $918M. The firm says that in the wake of broad-based financial market uncertainty, and its effect on global wealth, "we feel it prudent to take a more conservative stance" on the outlook for the art-market. Additionally, the firm notes that Sotheby's has indicated plans to reduce its use of auction guarantees until the markets have stabilized.