Sotheby's seems to have mixed results financial results for the 2nd quarter of 2013. While some of the quarterly financial results were positive and improvements on the previous year, analysts had higher expectations, and due to intense competition at the top end of the market, it may be difficult for further gains for the remaining portion of 2013.
CNBC reports on Sotheby's earnings
Source: CNBCNEW YORK -- Sotheby's shares slipped lower Wednesday after the auction house's second-quarter net income and revenue didn't grow as much as Wall Street expected.
THE SPARK: Sotheby's reported its quarterly results after the market closed on Tuesday. The company said that its net income rose 7 percent to $91.7 million, or $1.33 per share. Revenue edged up to $304.9 million from $303.9 million, with auction and related revenue grew 2 percent to $294.9 million.
Analysts were expecting net income of $1.37 per share on $317.8 million in revenue, according to FactSet.
THE BIG PICTURE: The New York company said buyer's premium rates increased in March, which added $19.8 million to its auction revenue. Sotheby's also got an assist from a $6.8 million income tax gain during the second quarter.
Sotheby's said its Impressionist and Modern Art sales in June brought in $199.3 million, a significant increase from the year before. The biggest selling painting during the period was Claude Monet's "Le Palais Contarini," which sold for $30.8 million. Sotheby's said that its contemporary art auction brought in $147.6 million.
The company also said that it is continuing to explore options for its New York headquarters and plans to do the same for its London premises on New Bond Street.
THE ANALYSIS: Citi Investment Research analyst Oliver Chen said auction commission margins were lower than he expected, however. Chen said Sotheby's is working harder to find ways to improve its earnings and deliver better returns for shareholders, but competition in the high-end auction market is intense and Sotheby's may not be able to boost its revenue and profit margins in the second half of 2013.
He rates the shares "Neutral," but raised his price target to $45 per share from $33.
SHARE ACTION: Sotheby's shares lost $1.47, or 3.3 percent, to $43.44 in afternoon trading. The stock reached a two-year high of $45.98 on Thursday. Since the end of November Sotheby's shares have risen nearly 56 percent, including a 34 percent gain since the start of the year.
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