Earnings Preview: Sotheby's

Sotheby's (BID) is expected to report Q2 earnings after market close Tuesday, Aug. 5, with a conference call scheduled for 4:45 pm ET.

Guidance

Analysts are looking for a profit of $1.41 on revenue of $319.43M. The consensus range is $1.30 to $1.50 for EPS, and revenue of $275.2M to $346.9M, according to First Call. In June, Sotheby's guided Q2 revenue of $305M to $330M and operating income of $117M to $142M.

Analyst Views

Sotheby's recently held its contemporary art auction, raising more than $1B and, having posted sales of nearly $3B for 1H, defied predictions by some experts that the art market would see either a correction or severe downturn in the near-term. Monte Carlo dealer David Nahmad said that while collectors are being careful, "the market is still healthy for great, dead artists." Senior executives have also voiced confidence that, despite falling stocks and credit crunch, the art market has the depth to sustain soaring values.

A Wedbush Morgan analyst believes Q2 results will be in line with expectations, and believe there is a potential Q3 upside from recent assignment wins. The analyst said that impressive results in the important spring season have highlighted continued strength in the global art auction market, this trend is somewhat offset by an ongoing contraction in auction commission margins. The firm believes Sotheby's growth was partially driven by rising demand from commodity-driven wealth in overseas markets such as Russia.