Goldman Sachs Has Positive Bias on Sotheby's (BID), Maintains Neutral Rating

Goldman Sachs maintained Neutral rating on Sotheby's (NYSE: BID) with a price target of $44. Analyst Taposh Bari's view is unchanged despite a 10% post-earning correction, although bias is now positive.

"Auction commission margins declined 74 bp yoy to 15.2%, slightly above our estimate (100 bp decline) as a shift to higher ticket lots hurt mix. Adjusted operating expenses were only $3mn ahead of our estimate on higher incentive compensation. We believe BID continues to execute well against its stated cost reduction plan, particularly in areas like marketing and G&A where ytd cost savings have already met FY14 targets. Leverage on agency direct costs is also outpacing the stated target," said Bari.

"Our view on the revenue line is largely unchanged amidst no new information on auction sales or auction margin. We tweak our EPS estimates lower on lower private sales estimates and a higher tax rate," added the analyst. "We remain Neutral rated on BID, but with a positive bias following today’s correction. Momentum in the art market, albeit off of record levels, appears strong through the spring season. Management focus on expense control and capital allocation accountability creates an opportunity additional catalysts in the future – mainly details around the latest restructuring initiative and a likely special dividend with 4Q14 results."

For an analyst ratings summary and ratings history on Sotheby's click here. For more ratings news on Sotheby's click here.

Shares of Sotheby's closed at $40.69 yesterday.

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