The choppy/consolidating (or perhaps worse) market conditions sometimes give the impression that growth plays do not exist, but that is not the case, and one growth company worth reviewing is Sotheby's.Sotheby's (NYSE: BID) is the world's second-largest auctioneer of fine arts, antiques and collectibles, offering property in numerous collecting categories, including paintings, jewelry, decorative arts, and books.
Analysts expect Sotheby's to register strong revenue growth in 2008, with an improving financial position, and modest debt. Furthermore, costs remain reasonable. The Reuters F2008/F2009 EPS consensus estimates for the company are $2.82/$3.14.
Meanwhile, the company's prospects for securing new business are modest-to-good: the high-end auction market is likely to suffer a period of consolidation as cash-flush investors lower the amount of money they're willing to commit to art and antiques. Still, Sotheby's strong reputation and demonstrated auction proficiency position the company for growth when the better days return. Moreover, fine art's value history in the modern and now postmodern eras indicate that when the U.S. economy rights itself, the better days for art will return.
The risks? A substantial, sustained U.S. recession would (obviously) hurt the company's results.
The First Call mean rating for Sotheby's is: Buy. [6 firms.] Mean 2008 target: $45. [high: $48, low: $42.]
Stock Analysis: Sotheby's is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 2 years should be rewarded from the shares. Sell / Stop Loss if you were to purchase shares in this company: $18.
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